BSP sees Rice Tarrification Law having impact on inflation by April

March 8, 2019

The Bangko Sentral ng Pilipinas (BSP) forsees the rice tariffication law to have an impact on the inflation rate possibly by April.

“Maybe starting April 2019. Although even now, the NFA Council has approved out quota importation,” BSP Deputy Governor Diwa Guinigundo said in a text message to The Daily Manila Shimbun.

“This means we have started to liberalize imports,” he said.

BSP Governor Benjamin Diokno said this non-monetary measure is expected to “relieve” food supply.

“Last year presented a challenge for the conduct of monetary policy. Shocks from high oil and food prices brought average inflation to 5.2 percent exceeding the government target of 2 to 4 percent,” Diokno said.

“Now with the inflation slowing down in recent months. Authorities have further opportunity to assess the stance of monetary policy. Giving the impact non-monetary measures to relieved food supply bottlenecks including the implementation of rice tariffication law,” he added.

The BSP is expecting inflation to settle within the target bond of three percent, plus or minus one percentage point, from 2019-2020.

“Inflation expectation also started to stabilize within the BSP’s target while domestic economic activity remains fair,” said Diokno.

“Nevertheless, these risks both here and overseas require that the BSP should continue to look close eye on developments that could affect the outlook of inflation,” he added.

Diokno said they will remain data-dependent and sustain its institutional independence.

“We shall continue to pursue monetary and financial sector policies that are data-driven, evidence-based, and attune to the evolving market environment,” said Diokno.

The Department of Finance (DOF) said the implementation of tariffs on rice imports started March 5 under the Rice Tariffication Law. 

DOF said liberalization of rice imports is expected to cut retail prices of the staple by P2 to P7 a kilo.  Ella Dionisio/DMS