House Ways and Means chair and Albay 2nd district Rep. Joey Salceda on Tuesday, Feb. 7, warned that prices of fish and eggs will “remain elevated” throughout the year although he assured that inflation from February onwards will be lower compared to January.
Salceda explained in a statement that the only way for the prices of fish and eggs to drop is if corn prices and supply improves.
“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.
The veteran lawmaker, who is also an economist, lamented how the prices of corn have a year-on-year inflation rate of 16 percent, and has continued to accelerate month-on-month by one percent.
“This will drive prices of fish, because corn accounts for 60 to 70 percent of costs in aquaculture. Every one percent increase in corn prices leads to a P2 to P5 price increase in tilapia prices,” Salceda said.
“Egg is exacerbated by problems in poultry supply and smuggling of frozen chicken, which kills domestic raisers. But egg supply issues are not isolated. Nearby areas like Guam are already experiencing shortages”, he stressed.
He repeated earlier suggestion to consider corn tariffs and “try to direct as much of it” to increase production.
However, the lawmaker reminded that imported corn isn’t cheaper than domestic corn and could even be P2 more expensive than its domestic counterpart.
Meanwhile, Salceda said that while January 2023’s inflation rate of 8.7 percent “will go down”, there’s a “floor” and the government’s target of 2 percent to 4 percent might be difficult to achieve.
“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. High corn prices: that’s enemy number one,” the solon opined.
“The BSP (Bangko Sentral ng Pilipinas) will try to keep prices under control. Definitely another 50 basis point hike in interest rates during the Feb. 16 Monetary Board meeting will be taken up, perhaps announced,” he said.
Inflation, however, is not caused by accelerated demand, but it’s about supply, Salceda explained.