Philippines Cuts Rice Tariff, Prices Expected to Drop by P5 per Kilo

The Philippine government has announced a tariff reduction on imported rice, expected to lower retail prices by approximately P5 per kilo. Finance Secretary Ralph Recto stated this measure aims to mitigate inflation and ease household financial burden.

Tariff Reduction on Imported Rice Aims to Lower Prices by P5 per Kilo, Mitigate Inflation

According to Finance Secretary Ralph Recto (via ABS-CBN News), the government's new policy of reducing the tariff on imported rice could reduce the retail price of rice by approximately P5 per kilo.

This could, in turn, further reduce inflation, according to him.

Recto stated at the Economic Forum, which was jointly organized by the Economic Journalists Association of the Philippines and San Miguel Corp, that President Ferdinand Marcos Jr.'s Executive Order on tariff reduction of imported rice is intended to mitigate the current inflation-driven by rice, which is a result of the increasing global market prices.

“By slashing the tariff on imported rice from 35 percent to 15 percent, we anticipate an average of 10 percent reduction in retail prices for the rest 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 told business reporters.

Rice Tariff Cut to Ease Inflation, Significant Impact on Household Budgets, Says Finance Secretary Recto

According to Manila Bulletin, rice accounted for 53.5% of the overall inflation for average consumers in June, while it was 79.6% for the bottom 30% of households.

In June, inflation decreased to 3.7 percent, within the government's target range of 2 to 4 percent.

Governor Eli Remolona of the Bangko Sentral ng Pilipinas stated that maize prices have driven inflation since August 2023. According to Remolona, energy, encompassing utilities, and transportation, was the most significant factor in 2022. Subsequently, "food and non-alcoholic beverages" (excluding rice) followed. However, by August of last year, rice had assumed the position of the primary cause of inflation.

“The roles of the different components changed over time. That’s the nature of supply-driven inflation. This is why we think the non-monetary measures that the government has put in place are so helpful,” Remolona said.

Recto further stated that the government's response to the increasing rice prices is the new EO. He thinks a TRO or temporary restraining order will not be issued against the EO, as some organizations have requested.

Recto stated that the EO would result in revenue losses for the government of P9.2 billion pesos for the remainder of the year. However, he emphasized the significance of household welfare.

“They have more to spend on other things. It’s like a wage increase, but not inflationary,” said Recto on the possible reduction in rice prices.

Photo: Microsoft Bing