Basic food items such as rice, fish, meat and vegetables have been major drivers of inflation this year with the contribution of rice rising 10 times to 1 percentage point of the inflation rate, the Department of Finance (DoF) said.
According to Philippine Statistics Authority (PSA) data, rice was the number one contributor to inflation in September 2018, even as food items in the consumption basket accounted for more than half of the inflation rate in the same month.
In its presentation during the latest Cabinet meeting, the DoF said that in contrast, the contribution of non-food items such as electricity, gas and other fuels has slowed since July this year.
“Rice tariffication and reforms in food policy are needed to address the repeated rice supply problems,” Finance Secretary Carlos Dominguez III said at the Cabinet meeting.
The rice tariffication bill, once passed into law, is expected to liberalize the importation of rice in the country. It will also help lower rice prices while providing enough support for local farmers who will be affected by the influx of cheaper rice imports.
This measure has been certified as urgent by President Duterte. Economic managers said liberalizing rice imports will lower the retail price of rice by P2 to P7 per kilo (based on latest estimates), and reduce inflation rate by 0.4 percentage points.
Among the short-term measures recommended by the DoF at the meeting were for the Department of Agriculture (DA) to take steps to bring down food prices, and for the Departments of Social Welfare and Development (DSWD) and of Transportation to speed up the release and distribution of cash cards to the poorest households and fuel subsidy cards to operators of public utility vehicles, respectively.
The release of unconditional cash transfers by the DSWD and fuel subsidies through the Pantawid Pasada Program are among the social mitigation measures under the Tax Reform for Acceleration and Inclusion Act that are meant to cushion the impact of inflation on vulnerable sectors.
“Food inflation is the main driver of inflation, especially in recent months. The DA, which is the key to bringing down food prices, has been empowered under several presidential directives to put in place measures to increase food supply and bring down food prices,” said Finance Assistant Secretary Antonio Joselito Lambino II at a news briefing, where he gave the same presentation to the media.