PSA Forecasts Significant Rice Price Reduction in August

Retail rice prices in the Philippines are expected to drop substantially this month, driven by base effects and reduced tariffs on imported rice, according to the Philippine Statistics Authority (PSA).

Key Factors Influencing Price Reduction:

• Tariff Reduction: Executive Order No. 62, effective early July, cut tariffs on imported rice from 35% to 15%. This move is projected to lower retail rice prices by P6 to P7 per kilo.
• Base Effects: A high base in August 2023 is expected to influence a reduction in rice inflation this August.

PSA Chief Claire Dennis Mapa highlighted the potential for significant price reductions due to the new tariff rates. While July’s price reduction was minimal, with regular milled rice dropping from P51.10 to P50.9 per kilo, and well-milled rice decreasing from P55.96 to P55.85 per kilo, more noticeable reductions are anticipated in August.

Inflation Trends:

• Rice Inflation: Decreased to 20.9% in July from 22.5% in June.
• Average Prices: Special rice prices slightly eased to P64.42 per kilo from P64.56 per kilo month-on-month.

The Bangko Sentral ng Pilipinas (BSP) also noted that the risks to the inflation outlook have shifted to the downside for 2024 and 2025, largely due to the impact of the reduced import tariff on rice under EO 62.

Historical Context:

• August 2023: Rice inflation began accelerating, reaching 8.7% from 4.2% in June 2023.
• September 2023: Inflation continued to climb, hitting 17.9%.

Government Initiatives:

To alleviate the burden of high rice prices on consumers, the Department of Agriculture (DA) launched the Rice-for-All program on August 1. This program allows the general public to purchase rice at P45 per kilo at select Kadiwa outlets. Additionally, the P29 Rice Program offers subsidized rice at P29 per kilo for vulnerable sectors.