The Marcos administration plans to create an ad hoc group composed of economic mangers, as well as trade and agriculture secretaries that would put public interest ahead of vested interest groups on the supply and demand of key commodities.

Finance Secretary Benjamin E. Diokno said that one of the government’s proposed measures to avert another supply side constraints of key food items is the creation of a small technical working group (TGW).

According to Diokno, the TWG will consist of the National Economic and Development Authority, Department of Finance (DOF), Department of Budget and Management, Department of Trade and Industry and Department of Agriculture.

The creation of the new TWG is “for an objective and timely assessment of supply and demand conditions of key food items,” said Diokno, President Marcos’ chief economic manager.

“This responsibility should be taken away from vested groups. This will help ensure timely actions to avert short-term upticks in food prices,” the finance chief added.

Inflation has been one of the biggest challenges for the Marcos administration since it took over last year, mostly driven by higher food prices, particularly with the sugar and onion shortages.

But Diokno pointed that the government already initiated a number of measures recently to control inflation, such as additional importation of sugar and onion.

President Marcos, who is also the concurrent agriculture secretary, earlier allowed the importation of 440,000 metric tons of refined sugar, to help bring down its price to P85 per kilo.

The chief executive also imported onions, which Diokno expects to gradually stabilize the price of the commodity in the first and second quarters of 2023.

However, Diokno said timely importation of food items in short supply is not enough, noting that there has to be a focused effort to ensure that the imported goods reach the intended markets as soon as possible.

“The Bureau of Customs should release the imported food items with the same sense of urgency that we have given the importation of Covid-19 vaccines,” Diokno said..

“Local authorities should facilitate, not impede, the movement of essential food items to the intended markets. Restricting free movement of essential food item is one sure way of prolonging inflationary pressures,” he added.

Meanwhile, Diokno said the monetary authorities have done their part.

“In the fight against inflation, monetary policy is not the only game in town. The main sources of inflation remain on the supply side, which should be the responsibility of fiscal authorities,” the DOF chief said.

The Bangko Sentral ng Pilipinas (BSP) is the most aggressive in the region and the impact of its monetary tightening is also working its way.

From January 2022 to the most recent Monetary Board policy meeting, the BSP implemented 400 basis points while it was only 250 basis points for India, 225 basis points for Indonesia and only 100 basis points for Thailand and Malaysia.

“If the Executive Department succeeds in controlling the sources of inflation on the supply side more effectively, there will be less reason for monetary authorities to raise policy rates,” Diokno said.