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Soaring food prices hit Philippine consumers amid recession

Duterte orders price ceiling on meat and increased imports to tame inflation

President Rodrigo Duterte has slapped a 60-day price freeze on pork and chicken in a bid to rein in commodity price inflation burdening the Philippines as its economy struggles with the impact of one of the worst pandemic-induced recessions in Southeast Asia. (Source photos by AP and Getty Images)

MANILA -- When President Rodrigo Duterte's 60-day price freeze on pork and chicken took effect on Monday, over 300 meat retailers in Manila's Paco market decided not to open for business.

"The sellers couldn't find supplies that they can sell at prices set by the executive order," said Hector Salonga, vice president of the market's stall owners association. "Some will probably stop selling for the meantime or risk being penalized" if they don't follow the price caps.

The situation underlines the Philippines' predicament over rising commodity prices, which has burdened residents at a time when the country is reeling from one of the worst pandemic-induced recessions in the region.

Government officials said the inflation uptrend is temporary, but some economists have warned that prices may stay elevated during this year, eroding the purchasing power of millions of consumers and complicating economic recovery.

Last week, the Philippine Statistics Authority reported that inflation in January quickened to 4.2% year-on-year, the highest in 24 months. The figure breached the central bank target and marked the fourth straight month of acceleration.

A member of a monitoring team checks meat prices at the Cartimar market in Metro Manila, the Philippines, on Feb. 9, as the price freeze took effect. (Photo by Cliff Venzon)

Pork has particularly been grabbing headlines since the Christmas holiday season. Prices of pure pork meat in Metro Manila surged by 77% in January, driving the 17.1% overall inflation for the meat category, according to the statistics agency. Meanwhile, vegetable prices climbed 21.2%.

The price increases have been attributed to supply constraints due to the African swine fever that has decimated hog farms and a series of typhoons late last year that damaged plantations.

"There is a significant chance that full-year inflation will exceed [the central bank's] 4% target, unless the supply constraints are addressed," said Emilio Neri, lead economist at Bank of the Philippine Islands. A possible increase in global oil prices could also push inflation, he added.

Apart from price freeze in Metro Manila, Duterte has also approved more pork imports to increase supply, Cabinet Secretary Karlo Nograles said last week and warned that the government will hunt "smugglers, profiteers and hoarders."

The last time the government took extraordinary steps to tame inflation was in 2018 when prices surged to a 10-year high due to a rice shortage.

That paved the way for a law that liberalized rice imports, resulting in an influx of cheaper grains from Vietnam and Thailand. The policy hurt local farmers but has kept prices of the staple in check.

Roy Kempis, a professor at Pampanga State Agricultural University, believes the spike in food prices is temporary, saying the fourth-quarter seasonal uptick may have been extended to January due to restrictions on Christmas gatherings.

But Kempis said supply chain realities may limit the effectiveness of the price freeze. Metro Manila sources meat supplies from nearby provinces through layers of middlemen and setting a price ceiling could hamper supply to the capital.

"Implementing a price ceiling on pork and chicken will have a lot of loopholes because not all areas are covered," said Kempis, who favors increasing the minimum access volume on pork imports to rein in prices.

Efforts by the government to help bring supplies from the central and southern Philippines to the main island of Luzon, where the capital is located, may not be sufficient.

Paul Holayasan, president of the Central Visayas Pork Producers Cooperative, said the region's surplus is not enough to fill the shortage in Luzon.

Holayasan also said the price ceiling is only harming the industry already battered by swine fever. "It will cause losses in the pork supply chain," he said. "This would also discourage farmers from expanding and new farmers from starting."

At the Cartimar market in southern Metro Manila pork sellers couldn't comply with Duterte's order.

"It's impossible," said Jason Cendana, arguing that his supplier priced pork shoulder and belly at 275 pesos ($5.7) and 310 pesos a kilo, respectively, are higher than the caps of 270 pesos and 300 pesos under Duterte's order, which also set a 160 pesos-per-kilo limit for chicken.

The upswing in prices has hammered the pockets of consumers already tightening their belts due to the economic downturn, which has worsened unemployment and hunger.

Among those hurting is 49-year-old Anita Imperial, who has to feed six children. She lost a janitorial job while four of her children were retrenched from hotels and fast-food jobs.

"It's difficult, very difficult," Imperial said, clasping a plastic bag with a piece of milk fish and kangkong water spinach, their food for lunch. "If I buy pork, I can only buy a quarter of a kilo," she said.

The poor have suffered worse, with inflation in the poorest 30% of households accelerating faster at 4.9% in January, according to the statistics agency.

The recent price developments will be considered during this year's first monetary policy meeting of the Bangko Sentral ng Pilipinas on Thursday, central bank Gov. Benjamin Diokno said last week. But the governor, who called the uptrend "temporary," said "the sources of near-term inflation pressures are supply-side shocks in nature that should not require a monetary policy response unless they lead to further second-round effects."

Moody's Analytics and ING Bank on Monday said they expect the central bank to keep interest rates steady, after cutting by a total 200 basis points last year. That brought the key rate a to record low of 2.0% in a bid to support the recession-hit economy.

At Paco market, the meat vendors are banking on government support, such as transport subsidies, as many hope to reopen their shops soon. "We'll just follow the price ceiling -- with eyes closed," Salonga said.

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