Speaker Gloria Macapagal-Arroyo’s point man on counter inflation, Albay 2nd District Rep. Joey Salceda on Monday insisted that the government should consider reducing import food tariff to ease inflation.
Salceda issued the statement a day after the Committee on Tariff and Related Matters (CTRM) rejected the proposal to lower tariff rates on imports of the agricultural products.
READ: Tariff cuts on food imports junked
Importing products at reduced tariffs was one of the moves suggested to President Rodrigo Duterte to address the rising rate of inflation in the country.
“Without this measure, there is greater pressure on BSP (Bangko Sentral ng Pilipinas) for more tightening to curtail aggregate demand which may jeopardize growth targets further down the road esp after the 6% Q2 GDP (gross domestic product),” Salceda pointed out.
He added that “there is little time for debate” as “this decision puts greater pressure on other measures to arrest the momentum, to prevent a wage-price spiral, and bring inflation back to low-4% zone.”
However, moving forward from the CTRM’s rejection of the proposal, Salceda said the National Food Authority should “import more, distribute the P27/kilograms rice more aggressively and target poor communities and buy more local production at support prices as it coincides with the harvest.”
President should also issue a directive to all departments supervising regulatory agencies to defer approval of price adjustments and if approved, suspend implementation.
Salceda noted that it was food inflation of +7.1 percent that drove the 5.7 percent headline in July.
READ: Inflation peaks to new over 5-year high of 5.7% in July
“Headline inflation for the poor (lowest 30%) was 6.7% due to 60% share of food in their consumption,” he added.
READ: Food, fuel costs push up inflation
Salceda further stressed that import food tariffs “are not negligible,” citing that meat has 40 percent tariff, while farm gate prices of pork and chicken rose by 7 percent in the 2nd quarter based on a Department of Agriculture’s report.
He added that fish (tariffs of 7-15 percent) rose to 12 percent and vegetables (3-40 percent tariffs) by 16 percent.
“But beyond tariff magnitude, the whole idea was to shift the supply curve to the right by reducing tariff barriers- so existing players will behave reasonably competitive in pricing their products at the risk of new entrants,” he emphasized.
“Given the peso movement to 53.40/US and Brent at $72 and the supply disruptions from Habagat, inflation is more like to peak beyond 6% in August,” he added.