MANILA (2nd UPDATE) - Fuel and flour prices in the country are expected to rise amid the escalating crisis between Ukraine and Russia, Filipino businessmen and analysts said on Thursday.
Businessmen are expecting flour prices to rise as a large part of the world’s wheat supply comes from Russia, Ukraine as well as other parts of Europe.
A supply chain disruption may happen if the situation further escalates, presidential presidential adviser for entrepreneurship and Go Negosyo founder Joey Concepcion said in a forum Thursday.
Gasoline prices, which already increased for 8 straight weeks, are also expected to further rise, Political Science and International Relations Professor Anna Malindog-Uy said, as Russia faces economic sanctions.
"Naglabas na ng sanctions ang US at saka ‘yung Britain… Ang supply ng natural gas sa European countries, mauudlot…‘Pag nangyari iyan, ang impact diyan, magsi-shift to oil ang mga European states, ‘pag nagkataon, supply and demand iyan eh," Malindog said.
(The US and Britain have already imposed sanctions [on Russia]. The supply of natural gas in European countries will be reduced. If that happens, European states will shift to oil and if that happens, it will all boil down to supply and demand.)
Former senator Nikki Coseteng, who took part in the forum, noted that Ukraine and Russia are the biggest exporters of wheat, which is milled into flour. Once flour prices rise, the cost of other food items will rise as well, she said.
"Even if we are several thousand miles away, we definitely are going to feel this tsunami of repercussions," former senator Nikki Coseteng said.
Small bakers said they are worried over the continued increase in flour prices.
“Hindi ko maalis sa isip ko. Nagko-complain na sila about flour prices going up," bakery owner Wilson Lee Flores said.
(I can't shake it off my mind. They're already complaining about the rise in flour prices.)
Pita bread factory owner Perla Miranda said flour prices have already increased to around P1,000 per sack from just P700.
“Napakalaki po ng epekto, halos wala na kaming kinikita," pita bread factory owner Perla Miranda said.
(It's has a huge impact. We barely have income from this right now.)
SUSPEND FUEL TAXES?
Lawmakers and civil society groups have called on the government to suspend the collection of excise taxes and other duties on fuel to dampen the impact of rising oil prices on consumers.
Deferring excise taxes would cut P6 off the price of diesel and P10 off gasoline, based on the TRAIN Law.
The Department of Finance however said suspending excise taxes, VAT and import duties on fuel would mean that the government would forego around P147 billion in revenues this year, money that is needed for economic recovery.
The government instead has pushed fuel subsidies for the transport sector.
The Bangko Sentral ng Pilipinas has said that its baseline inflation forecast of 3.7 percent for 2022 would rise by 0.1 percentage points if Dubai crude averages $90 per barrel this year. At $100 per barrel, the baseline inflation rate would rise by 0.3 percentage points.
According to trading platform investing.com, the price of Dubai crude averaged $83.45 in January, hit $87.42 on Feb. 1, and $91.7 on Feb. 23.
—Reports from Michael Delizo, ABS-CBN News; and Agence France-Presse