A 20% reduction in rice tariff would help ease inflation by at least 0.36%, said Rizal Commercial Banking Corporation chief economist Michael Ricafort.
"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," Ricafort stated
The economist added that rice accounts for nearly 9% of the country's consumer price index (CPI) basket. Meanwhile, imported rice accounts for almost 1.8% of the CPI basket.
According to Ricafort, the reduction in imported rice tariffs and prices by 20 percent could have a significant impact on inflation. He estimated that it could reduce headline inflation by about 0.36%, on a standalone basis. This impact could be even more significant if locally produced rice prices decrease due to the lower prices and tariffs on imported rice.
Ricafort projects 2024 headline inflation to average 3.6%. He noted, however, that the projection considers the impact of the tariff rate cut.
Ricafort said that once implemented, achieving a 3% annual average inflation rate " becomes more feasible."
The National Economic and Development Authority (NEDA) Board, chaired by President Ferdinand R. Marcos Jr., approved the tariff reduction on imported rice last week from 35% to 15% until 2028.
NEDA Secretary Arsenio Balisacan highlighted the dual benefits of reducing rice tariffs. He stated that it was expected to not only bring down rice prices for consumers but also support domestic production. This support would be in the form of tariff cover and increased budgetary support to improve agricultural productivity, a crucial aspect for a country with a significant agricultural sector.
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