Wage boards set to hear pay increase demands

THE government is considering a wage increase after inflation stayed above 4 percent for the third straight month, an official said Friday.

The wage-setting boards in Metro Manila and two other regions had started meeting to discuss petitions to raise the minimum daily pay, Labor Secretary Marianito Roque said in a telephone interview.

A labor group had petitioned for an increase of P75 a day in Manila, but “At this point it’s premature to say government is considering a wage hike,” Roque said.

A salary adjustment nationwide would depend on the needs of workers and the employers’ ability to pay, he added.

The rate of increase in the prices of goods and services stayed above 4 percent for a third month in February as oil and food costs rose, putting pressure on the central bank to further withdraw monetary stimulus.

Consumer prices increased 4.2 percent from a year earlier, after a 4.3 percent gain in January, the National Statistics Office said. That compares with the median forecast for a 4.3-percent increase in a Bloomberg News survey of 13 economists.

“We need to watch with an eagle eye any potential build-up in demand pressure as shown by higher core inflation,” Deputy Governor Diwa Guinigundo said Friday.

The Bangko Sentral was monitoring liquidity levels to ensure price stability, he said.

The Philippines imports almost all its oil and the price of the commodity has risen more than 80 percent in the past 12 months. The Niño weather phenomenon is also damaging crops in the country, threatening to push up prices.

Asia-Pacific countries from Vietnam to Australia have raised interest rates as inflation accelerates amid a regional economic rebound.

“Oil and coal prices are rising and clearly it is being passed on to energy companies and to consumers,” said Prakriti Sofat, a Singapore-based regional economist at Barclays Plc.

“Food-related prices have been grinding higher, and going forward the risks are biased to the upside, given that we have already seen crop damages from El Niño.”

The Bangko Sentral earlier this year raised the re-discounting rate, one of the interest rates it charges lenders for borrowing money from the central bank, by half a percentage point to 4 percent.

Policy makers kept the benchmark interest rate unchanged at a record-low 4 percent for a fifth straight meeting in January to support the economic recovery.

The inflation figures were supporting the central bank’s “within-target” inflation forecast for 2010 and giving policy makers “flexibility in timing and ordering our exit strategy,” Governor Amando Tetangco said.

Economic growth accelerated to 1.8 percent last quarter, the fastest pace in a year.

So-called core inflation, which excludes some food and energy items, climbed to 3.6 percent in February, the fastest pace in seven months, Friday’s report showed.

Food, beverage and tobacco costs rose 3.8 percent last month from a year earlier. Fuel, electricity and water prices climbed 11 percent. Bloomberg, with Joel E. Zurbano