The Department of Finance (DOF) has forecasted a potential P5 per kilogram decrease in the average price of rice by August, attributing this drop to reduced import tariffs.
Finance Secretary Ralph G. Recto said on Monday, July 8, that by lowering the tariff on imported rice from 35 percent to 15 percent, the DOF expects an average 10 percent reduction in retail prices for the remainder of the year.
“This could lower the price of rice by at least P5 per kilo. From an average of P54.40 per kilo last June, prices could go down to below P50 as early as August,” Recto said.
The finance chief said that rice has been the primary driver of inflation since September of last year, attributed to price increases in the global market.
“Rice accounted for over half of the overall inflation for average consumers last month. And for those in the bottom 30 percent of households, it had a bigger share at 80 percent,” he said.
“Thus, our mandate is clear: we must act swiftly to alleviate this burden that disproportionately affects the vulnerable population,” the finance chief said.
However, Recto noted the encouraging inflation rate for June, which dropped to 3.7 percent, stating, “We contained it within our target, and this is way below the median estimates of private analysts.”
“The lower rice tariff will help reduce the overall inflation rate for the year to an average of 18 percentage points, from 3.5 percent to 3.3 percent,” Recto said.
But Recto also admitted that the tariff cut could lead to government revenue losses totaling P9.2 billion for the remainder of 2024. Nevertheless, he said that this move improves the welfare of households, especially those in poverty.
“Had we not taken this step, rice prices would have remained above P50 pesos, causing significant pain for consumers,” he said.
“A sustained high price of rice could continue to drive inflation, delaying the reduction of policy interest rates by the BSP [Bangko Sentral ng Pilipinas] and derailing the country’s economic growth trajectory,” Recto said.