MANILA -- Stubbornly high inflation has prompted President Rodrigo Duterte to order government agencies to step up food imports while enlisting police to crack down on price manipulators.
Rising commodity prices has emerged as a major political and economic issue in the country, threatening growth prospects and Duterte's support ratings ahead of next year's midterm elections. Damage to crops caused by Typhoon Mangkhut in mid-September, estimated at about 27 billion pesos ($497 million), will also likely push inflation further, said Nicholas Mapa, senior economist at ING Bank, in a note last week.
Duterte, in an executive order signed on Sept. 21 but made public on Tuesday, directed the Department of Trade and Industry, National Food Authority and Sugar Regulatory Administration to ease restrictions on food imports and lift nontariff barriers to make commodities immediately available to consumers. Officials said last week that the move will eliminate middlemen who bloat prices.
The president also ordered that more private traders be allowed to import rice, and also temporarily permitted direct users to import sugar. At present, only select traders could import grains, while direct users of sugar -- like food manufacturers -- may only import through traders in order to protect local farmers.
In a separate instruction to the NFA, Duterte ordered the immediate release of rice in warehouses.
Duterte also ordered the import of more fish to augment existing supplies and expedite the unloading and distribution of agricultural exports. He directed trade and agriculture departments to reduce the gap between farm-gate and retail prices, and asked the National Bureau of Investigation and the Philippine National Police to help identify price manipulators.
According to the government, three food categories -- fish and seafood, rice and meat, and vegetables -- accounted for 2.4 percentage points of the 6.4% inflation rate in August, the highest proportion in nearly a decade.
Duterte's sweeping orders come as the government finds itself under intense public pressure, especially from the poor, who have complained that basic commodities are becoming increasingly unaffordable. Investors are also voicing concern, wary of the adverse impact on domestic consumption, the country's chief economic driver.
Apart from inflation -- which began to balloon early this year due to rising global oil prices -- and tax reform that hiked levies on certain commodities, the Philippines has been battered by its slumping currency. The peso is trading at its weakest level in over 12 years, due to a widening trade gap and the emerging market currency rout precipitated by economic woes in Argentina and Turkey, as well as the escalating U.S.-China trade war.
Finance Secretary Carlos Dominguez appealed to investors last week to "take a long view" of the situation.
"First of all, we do face twin deficits: a potential fiscal deficit and current-account deficit," he said. "We also are experiencing elevated inflation rates, however, we should look at the strengths that the Philippines has."
An economic team spoke with local and foreign investors as well as analysts last week, underscoring the country's still solid GDP growth and massive infrastructure buildup.