Beating inflation: Doing beyond the usual stuff

PHILIPPINES - In Brief 30 Dec 2024 by Diwa Guinigundo

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During the weekend, the Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP) announced that the December inflation rate could have tipped the scale at 2.3% -3.1%, well within the 2%-4% target. If inflation hits the mid-point of this forecast at 2.7%, the actual whole-year inflation rate could settle at 3.2%, the BSP’s own forecast during the last meeting of the Monetary Board the other week. But next year could be problematic. The Department of Agriculture (DA) recently announced that it was contemplating on declaring a “food emergency” early next year as “it scrambles to rein in the prices of rice, a key staple and a major driver of inflation” in the Philippines. This announcement raises some serious questions about the ability of Government to ensure the sufficiency of rice supply in the market from production to harvest to marketing to retail. It would be useful for the DA to report on the use of the proceeds of rice import tariffs in encouraging greater agricultural output and moderating rice prices. The issue of rice cartels and hoarders continues to haunt Government which had earlier committed to deliver rice to the community at P20 per kilo. If the DA has been able to sell well-milled rice under its Rice-for-All program at P40 per kilo, market prices show higher levels. Local well milled rice retails at between P42 to P52 per kilo. On the other hand, local regular milled rice prices range from P39 to P48 per kilo. Imported regular milled rice is available in the market at P44 to P45 per kilo and imported well-milled rice at P40 to P56 per kilo. Imports of rice have been precisely liberalized and tarrified in the Philippines in the hope that such a po...