Press Releases

Salceda cautiously optimistic that 2023 will see lower inflation, but warns food prices are “a structural issue”

January 5th, 2023

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says he sees “reason to be optimistic, although with some caution, that 2023 will see more acceptable inflation levels than 2022,” as December 2022 inflation hit 8.1%, leading the annual average to hit 5.8%. 

“There is good reason to believe that oil, transport, and energy prices will be cheaper, or at least not inflate as quickly as they did in 2021 and 2022. Leading projections indicate a supply surplus starting Q1 of 2023, as demand slows down and the US and other non-OPEC countries try to undercut the global cartel,” Salceda said.

Salceda adds that “the world seems to have already adapted partly to the Russia-Ukraine conflict, with Europe being able to fill their reserves without Russian piped gas. So, oil and energy prices could stabilize.”

Salceda however warns that “the entirety of 2022 showed that the country’s food price issues are structural.”

Salceda pointed out that food inflation remained the biggest contributor to December 2022 inflation, at 10.2%, “is extremely alarming.”

“And the highest price indices among commodities under food are vegetables at 32.4% and sugar at 38.8%, which we produce at a structural deficit but which are also very prone to smuggling.”

“In other words, you have smugglers who are not only not paying their fair share of taxes and duties; they are also profiting from high domestic prices.”

Salceda says that the country’s “predicament with onion prices” shows broader systemic issues with the country’s food trade and production system.

“We now have the world’s most expensive domestic onion prices. We have some of the world’s most expensive domestic sugar prices. Why don’t we just allow legal importation, at least among industrial or large-scale users like restaurant chains for onions and food manufacturers for sugar? These prices are obvious bubbles that we can burst.”

Salceda pointed out that rice price inflation is the slowest among all food items in the CPI. The country tariffied its rice trade regime in 2019.

“With the proper farmer support mechanisms, we can protect domestic food producers without killing other industries that use raw agricultural goods. We posted record-high production of palay in 2021, and 2022 production is projected to go just slightly below that, despite high fertilizer and fuel costs,” Salceda said.

“I think it’s time to break the smuggling cartels among onion, meat, fish, and other key agri commodities, make the food trade regime more transparent and open to all. That should help lower food prices – since part of the artificially high prices in these products is that some smugglers are also oligopolies in the domestic market,” Salceda added.

The Committee on Ways and Means, which Salceda chairs, has already committed to “focus its investigation and policymaking efforts on agri smuggling” in 2023.

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