Action needed to lower rice inflation
RICE inflation could become a more serious issue and appropriate actions need to be implemented by policymakers, analysts said.
Higher rice prices blamed on typhoon damage and global supply issues were behind September inflation of 6.1 percent, up from 5.3 percent a month earlier.
The rise was largely driven by a significant increase in food prices, particularly for rice, which saw inflation surge to 17.9 percent from 8.7 percent.
«The situation may still be within manageable bounds if it's a one-off supply chain disruption or seasonal fluctuation,» Security Bank chief economist Robert Dan Roces told The Manila Times.
«However, if the rice price increase is sustained or exacerbated by additional factors like poor harvests or import restrictions, it could become a more serious concern,» he added.
The government had capped rice prices in September in a bid to contain inflation, which has now risen for two straight months after easing from February to August.
«Given that prices rose sharply in September, we will need to see prices come down dramatically to get the price for this all-important staple under control,» ING Manila Bank senior economist Nicholas Antonio Mapa said.
«The only way we can do this is to ensure ample supply hits markets which in turn will temper price increases or even force prices lower,» he added.
Mapa said that supply-side measures were urgently needed to prevent rising rice prices to affect the entire consumer price index basket.
He noted that inflation was already being exacerbated by higher global energy prices and increased labor expenses.
«On top of rice, we will now likely see inflation pressures emanate from energy-related items given the surge in energy prices in the global market,» Mapa said.
«We've already seen the sharp run-up in private transport and public transport costs due to the jump in crude oil prices while utility costs have also risen sharply in the past two months,» he added.
Secondary effects are likely if supply-side issues persist, the economists said. This means that service and product providers could raise prices to cover higher production costs, caused by increased transportation and electricity expenses.
Monetary
