Salceda sees inflation-rate drop in Feb with harvest season

MANILA, Philippines — In the face of challenging economic conditions, a glimmer of hope has recently emerged.

Rep. Joey Salceda of Albay’s 2nd District says he expects inflation to start falling in February, with the impending harvest season serving as the primary driver for this improvement.

Surging inflation has hit an unexpected high in the Philippines, with the Philippine Statistics Authority reporting an 8.7 percent rate of inflation in January 2023 – surpassing the 8.1 percent seen in December 2022. The rising cost of living news has been met with concern by Salceda, chair of the House ways and means committee, who on the matter on Tuesday.

READ: Philippine inflation rose to 8.7% in January

“I am sure the overall price level in February and every month in 2023 will be lower than 8.7 percent. Vegetable prices–especially onion–will go lower, especially during this harvest season. But I expect fish prices, as well as egg and dairy prices, to remain elevated. Corn drives those prices, and corn prices–imported or domestic–are expensive,” he said in a statement.

Salceda highlighted the reality that corn prices have been climbing 16% each year and a steady 1% per month. He pointed out that this will result in a rise in fish prices, considering that corn makes up 60 to 70 percent of aquaculture expenses.

“Every one percent increase in corn prices leads to a P2 to P5 price increase in tilapia prices,” Salceda added.

The lawmaker explained that eggs are “exacerbated by problems in poultry supply and smuggling of frozen chicken, which kills domestic raisers.”

READ: Next food concern: DA sets price watch on eggs

Salceda clarified, however, that issues with egg supply are not isolated since areas like Guam had already been experiencing egg shortages.

“So, I would repeat my initial suggestion to look into corn tariffs and try to direct as much of it towards increasing production. Imported corn isn’t also cheaper than domestic corn once landed. In fact, in some cases, imported corn is two pesos more expensive than domestic corn. So, it should be okay to import,” he said.

2 to 4 percent inflation ‘almost off the table’

But Salceda pointed out that the 2 to 4 percent inflation target of the government may be a tough goal to reach.

Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla previously said more interest rate hikes are expected in a bid to pull back inflation within the 2 to 4 percent range.

“You can be sure 8.7 percent will go down, but there’s a floor,” Salceda said. “All in all, it looks like 8 percent is a cyclical level, but 5 percent is structural. So, that makes your 2 to 4 percent inflation target almost off the table, unless you make decisive efforts on the key drivers.”

‘Filipinos paying the price’

Gabriela Women’s Party Rep. Arlene Brosas, meanwhile, pressed President Ferdinand “Bongbong” Marcos Jr. to “answer for the steep inflation rate and heavier economic burden weighing on the shoulders of ordinary Filipinos.”

“Walang direktang epekto ang investment pledges sa pagpapababa ng presyo ng mga bilihin. Ang kagyat na dapat gawin ay itaas ang sahod ng mga manggagawa, maglaan ng subsidyo sa agricultural production para ibaba ang presyo ng pagkain at suspendihin ang value added tax (VAT) at excise tax sa langis,” she said in a separate statement.

(The investment pledges do not directly bring the cost of commodities down. What must urgently be done are to increase the salary of workers, allot subsidies for agricultural products to decrease the prices of food and suspend the VAT and excise tax for fuel.)

The inflation rate in locations outside of Metro Manila, Brosas continued, is far greater than the national average.

She also said the rising inflation across the world is no longer sufficient justification for this since, according to the lawmaker, inflation in the United States and Eurozone, among others, have already dipped.

“The latest inflation data also betrays the forecast of economic managers that inflation has already peaked in December, which means that there is something terribly wrong, and ordinary Filipinos are paying the price for terrible macroeconomic policies,” she said.

Brosas further argued that another interest hike, as earlier mentioned by the BSP, does not promise a subsequent decline in the inflation rate.

“On the contrary, another rate hike will prove to be damaging to productive sectors which rely on bank credit. Posibleng magdulot ito ng panibagong bugso ng tanggalan sa hanay ng mga manggagawa at pagsasara ng maliliit na negosyo (This may bring about a new wave of employee dismissals and business shutdowns),” she said.

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