Inflation slows to 2.1%
C&C VIEWS - Ed F. Limtingco (The Freeman) - September 18, 2013 - 12:00am

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) NewsBriefs, a regular publication produced by IDEA, inflation continued to ease and remained at low levels in July. A report from the Bangko Sentral ng Pilipinas (BSP) stated that on a yearly basis, headline inflation was at 2.1 percent in August, declining from the 2.5 percent level in July. This is at the lower end of the BSP’s forecast for inflation, which was 1.9 to 2.7 percent in August. Average inflation rate from January to August is at 2.8 percent, lower than the 4.0 target set by the government for 2013.

Per IDEA, core inflation also slowed down to 1.9 percent last month, falling from the 2.3 percent level in July. On a monthly basis, headline inflation increased from 0.1 percent in July to 0.2 percent in August. The BSP attributed the fall of headline inflation to the slow increase in non-food items The slow increase was due to lower electricity charges resulting from lower generation charges of the Wholesale Electricity Spot market. Adequate domestic supply of food such as vegetables, sugar, oil, as well as slow increases in prices of meat, fish, and fruits resulted in a decline in food inflation. BSP Governor Amado Tetangco said that inflation was still in line with the BSP’s policy horizon.

Likewise according to the same published report, the Department of Budget Management reported that 90.8 percent of this year’s budget has already been released as of July. A total of PhP1.807 trillion of the PhP2.006 trillion budget was released in order to improve the speed of implementation of the government’s projects and programs. Of this, PhP926.7 billion was released to different departments. The released budget recorded a 23.18 percent increase compared to the PhP1.467 trillion released in the same period last year.

On the other hand, a report of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) stated that the Philippine economy is expected to grow by 6.2 percent this year. Growth will be “driven by a strong private consumption.” Though higher than other Southeast Asian countries, economic expansion in the country will be difficult because of poor global demand. UNESCAP stated, however, that improvements in the public-private partnership programs can speed up the country’s expansion.

Furthermore, the merger between the Philippine Stock Exchange (PSE) and the Philippine Dealing & Exchange Corp. (PDEx) faced criticism as the PDEx faced an antimonopoly lawsuit. The Bankers Association of the Philippines stated that it will hold the merger until the issue is settled on high courts. Legislators and officials, which include Aquilino Pimentel Jr., Luis Villafuerte, Benjamin Diokno, Caridad Valdehuesa and Norma Lasala pressed the said lawsuit to the Supreme Court.

Lastly, the Bangko Sentral ng Pilipinas (BSP) reminded local government units (LGUs) to consult with the monetary board before borrowing from domestic sources. The BSP implemented this to better monitor the borrowing of the public sector and determine the impact of public debt to the monetary sector and external payments position of the country. As part of the program, the BSP warned that any bank that lends funds to an LGU without the latter securing the Monetary Board’s opinion will be penalized. The monetary board’s opinion is acceptable for six months from the date of issuance, according to the researchers of IDEA.

For comments, rejoinders and questions related to credit & collection, send email to elimtingco@yahoo.com

AQUILINO PIMENTEL JR. ASIA AND THE PACIFIC BANGKO SENTRAL BANKERS ASSOCIATION OF THE PHILIPPINES BENJAMIN DIOKNO BSP CARIDAD VALDEHUESA AND NORMA LASALA DEPARTMENT OF BUDGET MANAGEMENT INFLATION
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