June 6th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that he expects the Bangko Sentral ng Pilipinas (BSP) to pause rate hikes following the release of May 2023 inflation data which is in line with the expectations of the central bank. Salceda, however, urged the trade and agriculture departments to take a closer look at the prices of bread and vegetables, especially onions, saying that “something is off” with bread prices while “onion prices could shoot up again if we don’t do something to boost supply within the next few months.”
“Inflation continues its downward momentum year-on-year, and is in line with the BSP’s expectations. So, I expect Governor Medalla and his predecessor to pause the BSP’s interest rate hike regime barring any major changes in rates by the US Federal Reserve,” Salceda said.
“That said, on a month-on-month basis, price levels have remained unchanged on the aggregate. Hence, for ordinary households, the slowdown in price levels is rather theoretical. Expect continued consumers to continue curtailing spending. Core inflation is also still at an elevated 7.7 percent, indicating that food-poor families remain vulnerable to high prices. We need to sustain efforts to improve food supply, lower logistics costs, and keep the prices of basic services under control,” Salceda added.
Salceda pointed out specific items in the basket of goods which he says requires government attention.
“The most glaring target for me remains to be sugar, which sticks out at an inflation rate of 31.6 percent. We cannot have a thriving food manufacturing sector when our sugar prices are at this level. The solution is structural, but could be politically difficult. It’s obvious – import. But we need to find a sweet spot, probably just for industrial users,” Salceda said.
“Bread prices are also much higher than expected. Something is off, there, since world prices of wheat have collapsed by 40.74 percent year-on-year. I will be lodging an official query with the Bureau of Customs on the price levels of imports of wheat between May 2022 and May 2023. I also urge the DTI to take a closer look,” Salceda added.
“Wheat prices are in fact lower than where they were prior to the Russian invasion of Ukraine. So, something really doesn’t make sense there.”
Salceda also added that the country may need to bolster its onion inventory, as stocks may begin running out after the January-February harvest season.
“Higher vegetable prices appears seasonal, and I urge the DA to once again watch out for onion prices, since the stock from the most recent harvest will begin to run out next month. We already know what will happen. Three months, and the harvest stocks are nearly out. Obviously, we need to import and they need to arrive during lean season,” Salceda added.