Tariff cuts to further cool inflation – DOF

MANILA, Philippines — The Department of Finance (DOF) expects inflation to ease further in the coming months as the impact of the rice tariff cut becomes more pronounced.

In a statement following the 3.3 percent inflation in August, Finance Secretary Ralph Recto said the slowdown in headline rate was due to the government’s interventions to stabilize food prices.

Inflation cooled to 3.3 percent last month from 4.4 percent in July due to cheaper food, non-alcoholic beverages and transport costs.

In particular, rice inflation slowed to 14.7 percent from almost 21 percent as the impact of the reduced rice tariff rate policy started to take effect.

Executive Order 62 slashed the rice tariff to 15 percent from 35 percent in a bid to tame inflation.

Recto said the lower rice tariffs are already showing results, with imports growing by 77 percent in August, resulting in lower rice inflation.

“We expect rice prices to drop more noticeably in September as the rice imported at lower tariffs in August reaches the local market,” Recto said.

“We will not be complacent. While we are now seeing the positive results of our measures, we are proactively monitoring potential inflationary risks to address them in a timely and targeted manner,” he said.

Recto maintained that the sustained drop in inflation would boost household consumption for the rest of the year and encourage more investments, particularly as borrowing costs decrease.

Further, the DOF noted that other concerned government agencies are stepping up efforts to implement targeted measures.

For one, the Department of Agriculture (DA) extended the required ship-out date for imported rice to 60 days from 30 days.

This gives local importers more time to secure better rates amid price volatility and helps lower retail prices by reducing landed costs.

The DA will also expand its Kadiwa program to Visayas and Mindanao, provide vaccines against African swine fever and initiate water management in anticipation of La Nina.