Economist: Rice tariff cut to ease inflation

MANILA – The rice tariff cut will help reduce headline inflation by at least 0.36 percent, an economist said.

"The reduction of rice import tariff rate to 15% from 35% would mean a 20% discount on imported rice, which accounts for about 20% of total rice in the country," Rizal Commercial Banking Corporation chief economist Michael Ricafort said on Wednesday.

According to Ricafort, rice accounts for nearly 9 percent of the consumer price index (CPI) basket.

He added that imported rice, meanwhile, accounts for nearly 1.8 percent of the CPI basket.

"Thus, lower imported rice tariffs and prices by 20 percent would help reduce headline inflation by about 0.36 percent, on a standalone basis, but more if locally produced rice prices go down as a result of lower prices and tariffs on imported rice," said Ricafort.

Ricafort projects 2024 headline inflation to average 3.6 percent.

He noted, however, that the projection does take into account the impact of the tariff rate cut.

Ricafort said that once implemented, achieving a 3 percent average inflation for the year is "becoming more feasible."

The National Economic and Development Authority (NEDA) Board chaired by President Ferdinand R. Marcos Jr. approved last week the reduction tariff of imported rice from 35 percent to 15 percent until 2028.

NEDA Secretary Arsenio Balisacan said reducing rice tariffs was expected to bring down rice prices for consumers while supporting domestic production through tariff cover and increased budgetary support to improve agricultural productivity. (PNA)