A worker arranges sacks of rice at a local rice store in Quezon City, October 4, 2023. President Ferdinand R. Marcos Jr. has lifted the implementation of mandatory price caps on rice. The Department of Agriculture (DA) and the Department of Trade and Industry (DTI) recommended the lifting of the mandatory rice price cap due to the decreasing rice prices in local markets and an increased supply of local harvest in the last quarter of 2023. Maria Tan, ABS-CBN News MANILA — Finance Secretary Ralph Recto asserted that the government’s new policy on reducing the tariff on imported rice could bring down the retail price of rice by about P5 per kilo

This, in turn, could ease inflation further, he said.

Speaking at the Economic Forum organized by the Economic Journalists Association of the Philippines and San Miguel Corp, Recto said President Ferdinand Marcos Jr.’s Executive Order on tariff reduction of imported rice is meant to address the current rice-driven inflation due to rising prices in the global market.

“By slashing the tariff on imported rice from 35 percent to 15 percent, we anticipate an average of 10 percent reduction in retail prices for the rest of the year. This could lower the price of rice by at least P5 per kilo from an average of P54.40 per kilo last June, prices could go down to below P50 as early as August,” Recto told business reporters.

He also reported that in June, rice accounted for 53.5 percent of the overall inflation for average consumers, while it is 79.6 percent for those in the bottom 30 percent of households.

Inflation in June eased to 3.7 percent, within the government's 2 to 4 percent target.

Bangko Sentral ng Pilipinas Governor Eli Remolona said that rice prices have been driving inflation since August 2023. Remolona said that in 2022 the biggest factor in inflation was energy, including utilities and transport, then a few months later it was ‘food and non-alcoholic beverages’ minus rice. But by August last year, rice had taken over and is now the leading cause of inflation.

“The roles of the different components changed over time. That’s the nature of supply-driven inflation. This is why we think the non-monetary measures that the government has put in place are so helpful,” Remolona said.

Recto added that the new EO is the government’s response to the rising rice prices, adding that he believes there won’t be a TRO or temporary restraining order against that EO as sought by some groups.

Recto said the EO will lead to revenue losses for the government amounting to P9.2 billion pesos for the rest of the year, but that the welfare of households is important.

“They have more to spend on other things. It’s like a wage increase, but not inflationary,” said Recto on the possible reduction in rice prices.