Rice contributed 1-percentage point to inflation in 2018 —DOF

The contribution of rice to inflation multiplied by 10 times to 1 percentage point this year, the Department of Finance said Thursday.

“According to the Philippine Statistics Authority (PSA) data, rice was the number one contributor to inflation in September 2018, while food items in the consumption basket accounted for more than half of the inflation rate in the same month,” the department said in a statement.

Inflation surged to 6.7 percent in September, a fresh nine-year high.

According to the DOF, food inflation was the main propeller of inflation.

“The contribution of fish to inflation has been growing since 2017 while vegetables added to the inflation rate largely because of supply issues owing to weather disturbances. The contribution of meat to inflation also rose reflecting a pricing mismatch,” Finance Assistant Secretary Antonio Joselito Lambino II said.

Rice Tariffication

The Finance department claims that the rice tariffication bill, once passed into law, will lower rice prices in the country.

“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,” the department said.

The bill seeks to liberalize rice importations.

President Rodrigo Duterte certified on Wednesday the rice tariffication bill as urgent, citing the “need to improve availability of rice in the country, prevent artificial rice shortage, reduce the prices of rice in the market, and curtail the prevalence of corruption and cartel domination in the rice industry.”

Easing inflation’s impact

To cushion the impact of soaring inflation on vulnerable sectors, the DOF recommends speeding up the government’s unconditional cash transfers and fuel subsidies as short-term solutions.

Raising agricultural productivity may help stabilize food prices, the department said, noting that medium-term approaches will also have a significant impact on inflation:

• Individualizing the agrarian reform collective titles to improve property rights and incentivize farm production

• Improving efficiency by reallocating budget from favoring certain crops and production inputs to more broad-based farm infrastructure, research and development, and support services

Lambino said these medium-term measures will be significant in tempering inflation. —Dona Magsino, GMA News