Philippines curbs rice prices as inflation worry mounts

One of the world's biggest rice importers, the Southeast Asian nation is cracking down on domestic price manipulation at a time of rising pressure from events such as the Russia-Ukraine conflict, India's export ban, and unpredictable oil prices.

President Ferdinand Marcos Jr. has approved a maximum price of 41 pesos ($0.72) a kg for regular-milled rice, below the 42 pesos to 55 pesos that prevailed on Wednesday in markets in and around the capital, Manila.

The maximum price for well-milled rice was set at 45 pesos a kg, below the range of 47 pesos to 56 pesos offered by retailers based on government data.

The ceilings will stay until Marcos lifts them, his office said in a statement.

Despite a steady supply of rice, authorities have reported a "widespread practice of alleged illegal price manipulation, such as hoarding by opportunistic traders and collusion among industry cartels in light of the lean season," it added.

A farmers' group welcomed the move.

"There is no reason for any price increase these past weeks as there is no rice shortage in the country," the group, SINAG, said in a statement.

Philippine rice inflation hit 4.2% in July, the highest since 2019.

The central bank expects headline inflation in August to settle within a range of 4.8% to 5.6%, accelerating after hitting a 16-month low of 4.7% in July, partly due to spikes in rice prices.

Philippine inflation has remained well above the bank's target range of 2% to 4%, keeping it on its toes even as it held the policy rate steady for three straight policy meetings, after a series of hikes totaling 425 basis points.

"Monetary policy has little ability to control food inflation, but the Bangko Sentral ng Pilipinas may need to act if second-round effects become prominent and inflation expectations are de-anchored," ANZ economists said in an Aug. 25 note, using the official name of the central bank.