Government creates group to assess food situation

As prices continue to rise

MANILA, Philippines — The government is forming a body tasked to timely assess the supply and demand conditions of key food items in the country as inflation blew past expectations last month despite the aggressive rate hikes delivered by the Bangko Sentral ng Pilipinas (BSP).

Finance Secretary Benjamin Diokno said the small technical working group would be composed of the Department of Finance (DOF), National Economic and Development Authority (NEDA), Department of Budget and Management (DBM), Department of Trade and Industry (DTI) as well as the Department of Agriculture (DA).

He said the objective of the formation of the body is for the timely assessment of supply and demand conditions of key food items.

“This responsibility should be taken away from vested groups. This will help ensure timely actions to avert short-term upticks in food prices,” he said.

The DOF chief said that fiscal authorities should continue implementing non-monetary measures to help calm the sharp rise in prices.

He cited the additional importation of sugar and onions.

The plan, he explained, is to import 440,000 metric tons (MT) of refined sugar to help bring down its price to P85 per kilo. Some of the imported sugar will be released upon “immediate arrival” in an attempt to “temper the high retail price of the product” without hurting the farmers.

Around 200,000 MT of the total volume will be for consumer use, while 240,000 MT will be set aside for a two-month buffer stock.

For onions, Diokno said prices are expected to gradually stabilize in the first and second quarters due to the recent arrival of imports intended to temporarily pacify the gap between demand and supply, as well as the forthcoming peak harvest season of locally produced onions.

“But timely importation of food items in short supply is not enough. There has to be a focused effort to ensure that the imported goods reach the  intended markets as soon as possible,” he said.

Diokno said the Bureau of Customs should release the imported food items with the same sense of urgency given to the importation of COVID-19 vaccines.

“Local authorities should facilitate, not impede, the movement of essential food items to the intended markets. Restricting free movement of essential food item is one sure way of prolonging inflationary pressures,” he said.

Inflation accelerated to a fresh 14-year high of 8.7 percent in January from 8.1 percent in December. This was the highest since the 9.1 percent booked in November 2008 and exceeded the 7.5 to 8.3 percent forecast of the BSP.

To tame inflation and stabilize the peso, the BSP Monetary Board  raised key policy rates by 400 basis points since May last year when it started lifting rates in tandem with the US Federal Reserve.

This brought the benchmark interest rate to a 16-year high of six percent from an all-time low of two percent. This was the highest since the overnight reverse repurchase rate stood at 7.50 percent in May 2007.

Diokno told reporters that the Executive Department, including local government units (LGUs), should be more aggressive and focused as the war versus inflation is an all-of-government campaign.

“Our monetary policy is the most aggressive in the region and its impact is also working its way. From January 2022 to the most recent Monetary Board policy meeting, we implemented 400 bps while it was only 250 bps for India, 225 bps for Indonesia and only 100 bps for Thailand and Malaysia. The Executive Department and the LGUs should intensify the implementation of more direct, non-monetary measures to help address the supply issues,” he said.

Diokno said  monetary policy is not the only game in town when it comes to fighting inflation.

“The main sources of inflation remain on the supply side, which should be the responsibility of fiscal authorities. While evidence of second-round effects is increasing, the previous direct actions by government agencies have yet to work through their way,” Diokno said.

Earlier, BSP Governor Felipe Medalla said the central bank is likely to deliver another hike, ranging between 25 and 50 basis points in its next rate-setting meeting scheduled in March.