Rise in July inflation seen; gov’t urged to bring down rice prices

By Jose Santino S. Bunachita |August 06,2018 - 09:33 PM

The government should focus on bringing down the prices of rice in order to help the poor especially with the continued increase in the country’s inflation rate.

Antonio Chiu, Cebu Chamber of Commerce and Industry (CCCI) president, made this call amid the predictions last week of economists of the Bangko Sentral ng Pilipinas (BSP) that July’s inflation rate would be expected to increase between 5.1 and 5.8 percent.

Chiu said that consumers were already suffering from the increase in the prices of basic commodities due to the high inflation rate.

“If you compare our retail price of rice to the world market price, Filipinos are made to pay almost double. I believe our government should do much more to bring down the price of rice to benefit the poor,” Chiu said in a text message to Cebu Daily News on Thursday (Aug. 2).

July inflation

Economists of the Bangko Sentral ng Pilipinas (BSP) earlier reported that the expected inflation rate for July is expected to rise to between 5.1 percent and 5.8 percent.

This is a higher range than its June forecast of 4.3 to 5.1 percent. Higher electricity and water rates as well as petroleum prices are being pointed as reasons for the higher inflation in July.

“Going forward, the BSP will continue to keep a watchful eye on the risks to the inflation outlook and will take necessary action to help ensure that inflation expectations remain firmly anchored to the target,” the BSP said in a statement,

The official inflation rate for July is expected to be announced on Tuesday (today). The Monetary Board is also set to meet on August 9.

BSP action

According to Chiu, he was expecting the BSP to likely increase interest rates in response to the higher inflation rates recorded in the country.

“This will mean that the BSP will likely increase interest rate in the next meeting of the Monetary Board in order to control inflation,” he said.

The BSP has already raised interest rates in two successive 25-basis point adjustments in May and June this year.

Bankers’ clamor

Bankers and financial market watchers have been clamoring for the BSP to raise interest rates since early this year in anticipation of the price spikes that inevitable came due to the high international crude oil and commodity prices, amplified by the tax increases of the Duterte administration which became in effect last January 1.

While there are many reasons why inflation rate is high, Chiu said the price of food is a major component to determine the country’s inflation rate.

On top of the food list is the price of rice which is a controlled commodity. This is why Chiu said government should look into adjusting the country’s rice prices.

Weak peso

Robert Go, Philippine Retailers Association-Cebu (PRA-Cebu) president, said that the government should stop the weakening of the peso and to temporarily stop the taxes on fuel.

Go cited this possible solutions as a way to ease the impact of inflation among the consumers.

Go also said that the increase in inflation was expected because of a combination of several factors which included the dollar exchange rate, new upcoming labor wage increase, the TRAIN Law, increase in electricity, fuel increase.

He said that these factors was a vicious cycle that had kept everything up.

So he encouraged government to stop the peso from weakening further so that the imports would not make goods higher.

He also said that the government should not increase electricity, the prices of coal and other kinds of fuel.

Inflation is bad

Economist Fernando “Perry” Fajardo, who is also the executive director of the Cebu Business Club, described high or low inflation as bad.

“High or low inflation is bad. (There’s) Nothing you can do about it except to find additional income or cut down on your consumption of non essentials,” Fajardo said when sought for comment about the forecast of an increase in the July inflation.

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