Low rice stocks blamed for high inflation
The Government’s Economic Team, composed of the Department of Budget and Management (DBM), Department of Finance (DOF), and National Economic and Development Authority (NEDA), said high inflation in July was largely caused by low rice stocks.
“The current price pressures emanate mainly from supply-side factors. Addressing supply constraints to curb inflation is the utmost priority of the government,” the Economic Team said.
“Part of the supply problem is the country’s declining rice stock inventory — caused by weather disturbances in the country and in other rice-producing countries like Thailand and Vietnam — which is taking a toll on the prices of rice,” it added.
Rice stocks in July 2018 at 2.36 million metric tons (MT) declined by 8.2 percent year-on-year (i.e. from 2.57 million MT in July 2017 and dropping by 18.8 percent from the preceding month’s 2.91 million MT), with the National Food Authority’s rice buffer remaining almost depleted.
Year-on-year, inflation picked up to 5.7 percent, higher than the previous month’s 5.2 percent.
The higher year-on-year inflation reading was brought about by the spike in the prices of food and non-alcoholic beverages.
The Economic Team said that moving forward, stronger government measures, most especially in improving agriculture productivity and, in the short term, a strategic trade policy, are needed to address supply constraints that have further pushed consumer prices up.