It started in India<\/strong><\/p>\n\n\n\n On July 20, India imposed an export ban on non-Basmati white rice to ensure domestic supply and keep prices low ahead of a key election year. For context: India is the world\u2019s top rice exporter, accounting for around 21.5-Million MT or 36.8% of global rice exports. Thailand is a distant second, accounting for 8.2-Million MT or 13.5%, and Vietnam is third with 6.8-Mn metric tons or 8.6%. <\/p>\n\n\n\n Export prices of Thai and Vietnamese rice immediately jumped following India\u2019s export ban, and Vietnam has scrambled to cover the shortage, pledging to increase exports by 10% to 7.8-Million MT this year. However, Thailand has urged farmers to reduce rice planting to save water following a season of low rainfall and as rice-growing regions in the north and east of the country experience drought or near-drought conditions.<\/p>\n\n\n\n Rice prices jump 10% last week<\/strong><\/p>\n\n\n\n Prices have already jumped by at least 10% in Philippine marketplaces over the past week, with premium rice prices going up from P54-56 per kilo to P60-62 per kilo. While the Philippines sources less than 5% of its rice from India, Vietnamese and Thai rice accounts for more than 90% of total imports. <\/p>\n\n\n\n Domestic production is simply not enough to cover demand, with the US Department of Agriculture (USDA) forecasting local demand to reach 16.5-Million MT against local production of 12.6-Million MT. In fact, the Philippines ranked as the third top rice importer in 2022, behind only China and the United States.<\/p>\n\n\n\n Buckle up for higher inflation in August<\/strong><\/p>\n\n\n\n With 80% of Filipinos consuming rice on a daily basis, rice has an outsized weighting on the already overweight \u201cFood and non-alcoholic beverage\u201d commodity group used in computing inflation. July data showed that rice prices have increased by 4.2% from the previous year, causing the cereal and cereal products sub-group, which includes rice, to contribute 2.0% to headline inflation. <\/p>\n\n\n\n If local prices would eventually mirror the export prices on the world market, that would translate to nearly 30% YoY increase, which would snap inflation\u2019s 7-month downtrend and likely send headline inflation back above 7.0%.<\/p>\n\n\n\n