July 5th, 2023
I was with media this morning when I gave out my projection of 5.5 percent inflation for the month of June, so the actual figure being lower, at 5.4 percent, is very much welcome, and is well within expectations.
Expect business and consumer confidence to continue to improve as inflation figures are now very much anchored on expectations.
Broken down, however, inflation in key food items convinces me that recent proposals to increase taxes on sweetened beverages and impose new taxes on junk food need further refinement and study.
Flour and bread products are at 11% inflation. Milk, dairy, and eggs are at 11.2%. Fruits and nuts are at 11.4%. Vegetables are at 12.7%. This is all while sweetened beverage inflation is just at 7%. So, the healthier alternatives to junk food and drinks are becoming expensive, and I would be very hesitant to impose food taxes in such conditions.
Rice inflation remains low at 3.6 percent, which is good news especially for the bottom 30 percent of households who spend as much as one-fifth of their budget on rice.
It’s also a part of one of PBBM’s most underreported achievements. Ever since he took over as DA Secretary, farmgate price for palay per kg has increased from P17.24 kg in May 2022 to P19.06 in May 2023, a 10.6% increase, even when retail prices increased only by 3.6% over the same period.
This indicates means that farmers are getting a better deal for their produce. This is also the opposite of what was observed during the initial months of rice tariffication, when farmgate prices declined faster than retail prices did. So, there are signs that the rice cartel is being diminished if not demolished under PBBM as DA Secretary.
Moving forward, the main focus must be on sustaining agricultural production amid threats of El Nino. I have discussed my ideas with the National Irrigation Administration on this, and I will continue to work with the agencies to help them with what they need from Congress.