By Chino S. Leyco
The spike in rice prices because of alleged lack of supply, a weak peso, rising oil prices abroad, better tax compliance of local cigarettes, and growing consumer demand accounted for the bulk of the inflation in April, the Department of Finance (DOF) said.
“Inflation rose mainly because of local and global factors. TRAIN accounted for only 0.4 percentage points of the 4.5 percent. In other words, if you could buy items for P100 last year, you need to spend P104.50 now for them and of that increase, only 0.40 (40 centavos) was due to TRAIN,” Finance Undersecretary Karl Kendrick T. Chua said.
It is convenient to blame the tax reform package and ask for its suspension but “we have to match the proposed solutions to issues we want to address, and TRAIN is not the main reason for inflation,” Chua said.
Regarding rice, the government has already transferred the National Food Authority (NFA) to the Department of Agriculture (DA) for better coordination, Chua said in a statement.
But rice prices can still be up to R7 per kilo lower if imports are allowed freely but subject to tariff, Chua said.
Right now, the quantity of imports is limited by a quota and importers need to apply for a license, constricting supply in the process, he added.
“Allowing the private sector to import rice but with tariffs will improve the supply response of the grain in the market and bring down rice prices. This will benefit the poor the most as rice accounts for 20 percent of their consumption,” Chua said.
Oil prices abroad also rose because of unexpected geopolitical and global economic factors affecting supply like lower production from Venezuela, the potential US sanctions on Iranian oil exports, voluntary output cuts by the oil cartel and Russia, he said.
The additional excise tax on oil and oil products arising from the TRAIN accounted for only 0.2 percentage points, he said.
Chua said that despite the uptick in inflation, both self-rated poverty and hunger fell to record lows in the first quarter as shown by a Social Weather Stations (SWS) survey during that period.