Rice price cap may work if subsidies reach retailers: analyst | ABS-CBN

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Rice price cap may work if subsidies reach retailers: analyst

Rice price cap may work if subsidies reach retailers: analyst

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The government’s move to impose a ceiling on rice prices may work if the promised subsidies reach the small retailers who will be affected by the order, an economist said on Tuesday.

President Ferdinand Marcos Jr signed Executive Order 39 which mandates regular milled rice to be sold at P41 pesos and well milled rice at P45.

Many rice retailers however said they will be selling at a loss if they follow the order, and they may just opt to stop selling.

Cristina Ulang, head of research, First Metro Investment Corp, meanwhile said subsidies may cover the expected losses.

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“I think if they’re [government] able to execute on the subsidies that’s going to retain the appetite of the small retailers to still do their rice trading because the subsidies will cover the expected losses,” Ulang said.

She said the government may have resorted to a price cap to curb speculative manipulation of prices by hoarders and the alleged rice cartel.

“I think what the government is doing is just to signal that they are going to police all these sources of market distortion.”

The National Economic and Development Authority earlier said the price of rice had been sharply increasing over the past weeks, which is inconsistent with the apparent supply and demand situation.

NEDA said the price cap was temporary until fresh rice harvest come into the market.

Meanwhile , Ulang said the inflation uptick in August may just be a blip in the downward trend. She noted that food prices rose last month as weather disturbances affected supplies.

The high base effect from last year, wherein the inflation ratre hit 8 percent in November and 8.1 percent in December, may also mean that inflation in the coming months may be lower.

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