BSP awaits decision of regional wage boards

MANILA, Philippines – Monetary authorities are awaiting the decision of the regional wage boards on the amount of salary increase that would be approved to be able to assess its impact on consumer prices, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said yesterday.

Tetangco told reporters yesterday that the BSP’s Monetary Board has already incorporated the impact of a proposed wage hike and transport fare increase in its latest inflation forecast last April 22.

“I don’t want to give a figure right now because this will still be discussed, but we have incorporated certain wage increase,” Tetangco stressed.

However, he pointed out that the amount incorporated by monetary authorities in its latest inflation forecast was lower than the P75 to P125 per day increase being sought by various groups.

“It depends on how much increase is going to be approved, though a certain amount has been incorporated in the inflation forecast and depending on the amount as well as depending on the timing of the increase. We have to look at the impact of such an increase on inflation forecast, but we have incorporated some,” the BSP chief added.

The BSP is scheduled to meet today to decide whether or not to keep its key policy rates unchanged and if possible announce its latest inflation forecast taking into consideration the recent developments in the international markets including Europe’s debt crisis as well as the growing tension between North and South Korea.

“We review the forecast every meeting, if there will be a decision by the next meeting, then probably that will be factored into the new inflation forecast at that time,” he added.

Last April 22, the policy-setting body decided to jack up its inflation forecast to 5.1 percent instead of 4.64 percent this year and to 3.7 percent instead of 3.45 percent next year in light of the impending wage hike and transport fare increase.

Despite the higher forecasts, monetary authorities said average inflation would still fall within the BSP target of 3.5 percent to 5.5 percent this year and three percent and five percent next year.

Earlier, monetary authorities said inflation could hit a high of six percent either in June or July due to a possible wage increase, fare hike, and rising pump prices of petroleum products before easing towards the end of the year.

Latest data from the National Statistics Office (NSO) showed that inflation eased to 4.3 percent in the first four months of the year from 6.4 percent in the same period last year. The BSP sees inflation ranging from 4.2 percent to as high as 5.1 percent in May from 4.4 percent in April.

The latest inflation forecast would also take into consideration the stronger-than-expected gross domestic product (GDP) growth registered in the first quarter of the year. The country’s GDP zoomed to its fastest pace in almost three years after expanding by 7.3 percent in the first quarter of the year from only 0.5 percent in the same quarter last year. –Lawrence Agcaoili (The Philippine Star)