Lower rice prices seen

A substantial reduction in rice prices in local markets can be expected this month as the lower levy on imported rice kicks in, the Philippine Statistics Authority (PSA) said Tuesday.

“We will see. Because I know the reduction in the tariff will start so there is a possible substantial reduction in the price of rice this August,” PSA chief and National Statistician Claire Dennis Mapa said in a virtual press briefing.

“But our teams in the field offices are collecting data this week, and we are reporting it on the first 15 days. We will see if there is a substantial movement in the price of rice,” he added.

Further, the statistics bureau tracked the movements in the average prices of three sub-rice groups: regular-milled, well-milled and special rice.

For regular milled rice, the average price last month was P50.90 per kilo, down from P51.10 in June.

“There was a decrease, but it was not that big. But month-on-month, there was a negative 0.3-percent reduction,” Mapa said.

Meanwhile, the average price of well-milled rice registered at P55.85 per kilo last month, slightly lower compared to P55.96 in June, recording a month-on-month reduction of negative 0.2 percent.

For special rice, the average price last month was P64.42 per kilo, an inch down from the P64.56 in June. It also registered a reduction of negative 0.2 percent month-on-month.

President Ferdinand Marcos Jr. issued Executive Order 62 in June directing the modification of nomenclature and tariff rates on various products to ensure the continuous supply of goods and to protect the Filipino people’s purchasing power.

Duty rates under the order for imported rice are expected to decrease by P6 to P7. The reduced rice tariff for in and out-quota rates will take effect until 2028.

High food, utility costs drive inflation

Preliminary data from the PSA showed the country’s headline inflation — which measures the rate of increase in the prices of goods and services — revved to 4.4 percent in July, faster than the previous month’s 3.7-percent rate.

The latest figure brought the inflation rate for the year so far to 3.7 percent, which is still within the government’s target range of 2 percent to 4 percent.

July’s inflation rate also fell within Bangko Sentral ng Pilipinas (BSP)’s month-ahead forecast of 4 percent and 4.8 percent, but breached the central bank’s 2 to 4 percent target range for the year.

The PSA attributed the increase in July’s headline inflation rate to higher prices of both food and non-food commodities. Prices of housing, utilities, fuel, meat, corn and fruits all went up significantly.

On the other hand, core inflation — which excludes certain food and energy commodities with volatile prices — slowed from 3.1 percent in June 2024 and 6.7 percent in July 2023 to 2.9 percent in July 2024.

Typhoon’s effect on food

In a press briefing, Mapa said food prices increased from 6.5 percent in June to 6.7 percent in July as recent natural disasters had an effect on farm goods.

Broken down, the data showed meat prices went up month-on-month from 3.1 percent to 4.8 percent; corn from 13.1 percent to 17.5 percent; fruits from 5.6 percent to 8.4 percent; eggs and other dairy products from 1.3 percent to 1.8 percent; and ready-made food from 5.9 percent to 6.0 percent.

Rice inflation, however, decreased to 20.9 percent in July from 22.5 percent in June.

While the decrease in the rice tariff might keep inflation from increasing, Mapa said typhoon “Carina” and the devastating impact of the southwest monsoon possibly caused prices to rise again.

“(The) impact (of Carina) may have already started. But the expectation is that, based on our historical data, after a typhoon the prices of vegetables usually increase,” Mapa said.

“It’s possible there will be a substantial reduction in rice prices in August,” he added.

Non-food rates

Meanwhile, the PSA said transportation inflation increased to 3.6 percent in July from 3.1 percent in June due to the rising price of petroleum globally, which was caused by the unexpected large withdrawals of US gasoline stocks, optimistic forecasts for fuel demand, and the ongoing geopolitical tensions in the Middle East.

The inflation rate for housing and utilities increased to 2.3 percent from 0.1 percent, while the inflation rate for electricity decreased more slowly to -5.4 percent from -13.7 percent.

This shift is linked to the increase in liquefied petroleum gas international contract prices as well as Meralco’s July rate increase.

Following a staggered collection of May generation costs authorized by the Energy Regulatory Commission, the Wholesale Electricity Spot Market charges stabilized.

Monetary rate

Meanwhile, BSP Governor Eli Remolona told reporters on Tuesday that a rate cut in August will be “a little bit less likely since inflation is elevated.”

“It’s still worse than expected, but not that bad,” Remolona said.

The policy rate, which has been maintained at 6.5 percent for the past six sessions, will be reviewed by the monetary authorities when they convene on 15 August.

Remolona’s comments prior to the inflation figures were seen by market observers as possibly indicating a cut.

Nicholas Mapa, economist at Metropolitan Bank and Trust Co., said on X that the central bank “could still likely opt to ease the rate at their upcoming meeting to support growth” despite the fact that inflation is expected to decline in the upcoming months.