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More imports vs food price spike eyed

By: - Reporter / @bendeveraINQ
/ 04:59 AM February 08, 2021

Acting NEDA Secretary Karl Kendrick Chua

MANILA, Philippines — Tariff authorities are now looking into proposals to increase the importation of food to stem the rise of prices, which have zoomed past what the government considered last month to be manageable.

“Our priority right now is to ensure that food supply is adequate so that households affected by COVID-19 and the quarantines will not be doubly affected by the increase in food prices,” Karl Kendrick Chua, acting socioeconomic planning secretary, said in a statement on Friday.

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The spike in food prices pushed the headline inflation rate to a two-year high of 4.2 percent year-on-year in January, beyond the government’s target range of 2 to 4 percent.

Chua, who heads the state planning agency National Economic and Development Authority, said the Cabinet-level interagency Committee on tariff and related matters has endorsed to the Tariff Commission an increase in the minimum access volume of pork and the temporary decrease in the most favored nation tariff rates of pork and rice.

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Tight supplies

Due to tight supplies caused by the African swine fever and the damage caused by typhoons toward the end of 2020, faster price hikes were reported in meat products, especially pork, and vegetables.

Economists also worried that elevated consumer prices may temper consumption at a time when the pandemic-battered economy needed a boost to recover from last year’s gross domestic product (GDP) drop of a record 9.5 percent, the worst post-war recession.

Reduce tariffs

In a webinar on Friday, former socioeconomic planning secretary Cielito Habito, an Inquirer columnist, said the inflation rate would likely average 4 to 5 percent this year, hence a need to ramp up food importation.

“Right now, we are forced to open agriculture—in pork, because of the shortage due to the African swine fever. And this is no longer the time to oppose imports because the reason prices are skyrocketing is the sheer lack of domestic supply,” Habito said.

Roehlano Briones, senior research fellow at the state-run Philippine Institute for Development Studies, said in a position paper submitted to the Senate last week that “rather than rely only on price freezes, we recommend [to] further liberalize private-sector importation by reducing tariffs on meat, fish and vegetables.”

But House Minority Leader Carlos Isagani Zarate on Saturday opposed a looming opening up of the domestic market to an influx of imported goods amid a pandemic-induced recession.

Runaway inflation

“The Duterte administration’s policy of further liberalization of our economy will only aggravate rather than address the runaway inflation,” Zarate claimed in a statement.

But “runaway inflation,” or hyperinflation, is technically defined as rapidly rising and uncontrollable inflation, typically measuring more than 50 percent per month. Inflation rates less than 10 percent are generally considered manageable.

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TAGS: coronavirus pandemic, coronavirus Philippines, COVID-19, food imports, food price hike
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