Free price-setting

May 13, 2019

This is indeed a good reason for consumers to celebrate and take a more optimistic view of economic conditions ahead.

Economic managers have apparently succeeded in calibrating their policies to stabilize the movement of key commodity prices.

Such highly coordinated maneuver could preclude future price upticks and further boost consumer confidence.

But other than these calibrated moves, economic managers cannot further tinker with market forces and product pricing as the country has international commitments to stick to the free play of economic forces.

The government continues to rein in the overall price increases in the country with headline inflation rate easing to a 16-month low in April 2019, the National Economic and Development Authority said.

“The Philippines is under a free trade enterprise. Prices are set by companies, not by the government,” said Trade and Industry Sec. Ramon M. Lopez on the determination of prices of goods in the market.

“For basic necessities and prime commodities, however, DTI’s role is to help temper any price increase to protect the consumers, noting that there are only 9 manufactured basic necessities and 12 prime commodity items under the Price Act. The government closely monitors their prices as mandated by law and negotiates with manufacturers on the most reasonable price adjustments based on production cost movements. DTI studies the justifications based on the most reasonable cost to consumers while ensuring a fair return of investment for business. After negotiation, DTI finalizes and publishes the SRPs and closely monitors retail trade for compliance,” he added.

Last Saturday, the Department released the latest SRP list of BNPCs for the guidance and information of consumers and retailers.

"The recent SRP list showed that only 26 out of 235 Shelf Keeping Units have increased their prices, which is only 11% of the total SKUs that we monitor. The remaining 209 SKUs or 89% of the total products listed in the SRP bulletin did not increase. 17 out of the 26 SKUs (65%) that adjusted in prices have less than Php1.00 increase," explained Trade Secretary Lopez.

He further added, "Business principles dictate that companies do not necessarily increase their prices easily as they are also afraid of losing patronage to competition. As much as possible, manufacturers absorb rising production costs to keep their loyal customers.”

For canned sardines, its major raw material that is tamban (herring) is now priced at Php32.00 to Php34.00 per kilo. Prices of wheat flour, carton, wrappers, and seasoning have also increased and affected the prices of instant noodles. Raw and imported vinegar, and fish extract pushed upward the prices of condiments while warehousing and logistics affected cost of toilet soap.