THE EXECUTIVE department, particularly local government units (LGUs), should be more “aggressive” in the fight against inflation that is expected to remain elevated this year, Department of Finance (DoF) Secretary Benjamin E. Diokno said.
“The monetary authorities have done their part; the Executive department, including LGUs, have to do more, be more aggressive and focused. In the fight against inflation, monetary policy is not the only game in town,” Mr. Diokno said in a Viber message to reporters on Saturday.
His statement comes after the BSP on Thursday raised its benchmark policy rate by 50 basis points (bps) to a nearly 16-year high of 6%. The BSP had also signaled more rate hikes at its next meetings to cool red-hot inflation.
Inflation soared to a fresh 14-year high of 8.7% in January, as food prices continued to rise amid supply issues. This prompted the BSP to upwardly revise its average inflation forecasts for 2023 and 2024 to 6.1% (from 4.5%) and to 3.1% (from 2.8%), respectively.
“If the Executive department succeeds in controlling the sources of inflation on the supply side more effectively, there will be less reason for monetary authorities to raise policy rates,” Mr. Diokno added, citing the need to implement direct, non-monetary measures to address supply issues and bring down food prices.
He noted that since January 2022, the BSP has raised rates by 400 bps, compared with 250 bps for India, 225 bps for Indonesia and only 100 bps for Thailand and Malaysia.
Mr. Diokno said that the government is planning to form a technical working group (TWG) to assess the supply and demand conditions of key food commodities.
“This responsibility should be taken away from vested groups. This will help ensure timely actions to avert short-term upticks in food prices,” he added.
The TWG will consist of representatives from the DoF, Department of Agriculture, Department of Budget and Management, National Economic and Development Authority, and Department of Trade and Industry.
While additional imports of food items such as sugar and onions will stabilize prices, Mr. Diokno said there should be efforts to ensure these imported goods “reach the intended markets as soon as possible.”
“Local authorities should facilitate, not impede, the movement of essential food items to the intended markets. Restricting free movement of essential food items is one sure way of prolonging inflationary pressures,” he said.
The Finance chief said the Bureau of Customs must release food imports “with the same sense of urgency that we have given the importation of COVID-19 (coronavirus disease 2019) vaccines.” — Luisa Maria Jacinta C. Jocson