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Freeman Cebu Business

Inflation pulls back to 4.4% in September

C&C VIEWS - Ed Limtingco - The Freeman

According to the Institute for Development and Econometric Analysis, Inc. latest NewsBriefs, inflation pulls back to 4.4percent in September 2014. After two-straight months of elevated inflation, the consumer price index in September 2014 finally eased to 4.4percent. The months of July and August saw inflation climbing to a high of 4.9percent, dangerously treading the upper limit of the government’s target range of 3-5percent.

Core inflation, meanwhile, which nets out certain food and energy items, stagnated at 3.4percent. Leading the inflation slowdown is the heavily-weighted food and non-alcoholic beverages index. From hitting 8.7percent in August 2014, the food index alone improved to 7.8percent as prices of rice, corn, and vegetables posted lower annual upticks. Electricity charges and petroleum prices also decelerated.

Geographically, NEDA’s Emmanuel F. Esguerra noted the broad-based decline in the acceleration of prices. Inflation in the National Capital Region (NCR) stood at 3.5percent from 4.4percent in August 2014, while it was 4.7percent from 5percent in Areas Outside NCR.

After pointing out the favorable drop in Dubai’s crude oil prices and the increased availability of domestic power plants, Esguerra contends that the country’s inflation rate remains well-anchored. September’s inflation result also fell comfortably within the BSP’s forecast range of 4.1-4.9percent for the month.

Likewise per same published report, following a high of 4.9percent in the previous months, inflation in September 2014 came to a slowdown of 4.4percent on the back of decelerating prices of food, petroleum, and electricity charges. The easing of prices has divided the experts’ forecasts on the Monetary Board’s next move, whether to keep a tightening stance or a looser approach. The Board is set to meet this Oct. 23, Thursday.

Also, the Bangko Sentral ng Pilipinas reported that the banking industry ended July 2014 with its gross non-performing loans amounting to P95.19 billion, 0.42percent more than June 2014’s P94.8 billion. Despite this, the industry’s NPL ratio remained practically unchanged and stable at 2.11percent. The total loan portfolio of universal and commercial banks reached P4.51 trillion in July 2014.

Per IDEA, the country’s gross international reserves checked at $80.43 billion by the end of September 2014, $0.44 billion lower than the reserves registered a month earlier. The BSP assures, however, that the country’s GIR remains adequate, covering nearly 11 months’ worth of imports. Net international reserves, which refer to the GIR minus total short-term liabilities, also fell from $80.86 billion to $80.43 billion.

Furthermore, ahead of the Monetary Board meeting, BSP’s Governor Amando Tetangco, Jr. has already hinted at a less aggressive stance after the minutes of the US Federal Reserve’s September meeting was released. Concerns over a strong dollar has pushed the US Fed against raising interest rates anytime soon, prompting Tetangco to state, “This should provide us with some scope to see how our own series of actions are being absorbed in the market,” according to the researchers of IDEA.

elimtingco@yahoo.com

AREAS OUTSIDE BANGKO SENTRAL DEVELOPMENT AND ECONOMETRIC ANALYSIS EMMANUEL F ESGUERRA FEDERAL RESERVE GOVERNOR AMANDO TETANGCO INFLATION JULY AND AUGUST MONETARY BOARD
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