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Futures and Commodity Market News |
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Sat May 17, 2008 |
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Breaking financial news 24/7 courtesy of TradingCharts.com Inc. / TFC Commodity Charts |
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MANILA, May 08, 2008 (Asia Pulse Data Source via COMTEX) -- The central bank's fear that second round effects will cause a major impact in inflation remains a dormant prospect, research group Global Source said. In a study entitled Spiral not likely dated May 6, 2008, economists Romeo Bernardo and Margarita Gonzales believe that impact of higher wage and fare due to higher prices of oil is still not a concern even as wage pressures appear to build. They said the across-the-board increase of consumer price index (CPI) suggests that higher oil and food prices have affected the prices of other goods. But we are not overly concerned about this development as indirect effect of supply-side factors are known to be transitory, lasting only for the short to medium term, the study said. The economists said second round effects is not a cause in the near term because even as President Gloria Macapagal-Arrroyo ordered the study on wage hike proposals this remains with the regional wage boards. Although promises of minimum wage hikes had been made, these are not anticipated to exceed manageable levels (e.g. the BSPs expectation is P25 per day or a 7% adjustment), they said. However, Global Source said some posturing notwithstanding, the political leadership seems to have a keen appreciation of the risks of a price spiral compromising hard-earned gains in macroeconomic stability and jeopardizing future growth prospects, and will likely heed the cautious stance of economic managers on such matters as wages, spending, and transport hikes. The US-based think-tank's average inflation forecast for the country this year is between 7.5 percent to 7.8 percent on account of the inflation surprises with the actual April inflation already at 8.3 percent. We continue to expect price increases to taper by Q4, especially as the rice situation eases with a new harvest and as low base effects disappear, the economists said. Barring turmoil in oil prices and the peso, we anticipate inflation to fall below 5 percent by the second quarter of 2009, for a full year average of 4.9 percent to 5.2 percent, they added. The government targets this year's inflation between a range of three to five percent although central bank officials said these figures face risks due to continued increase in oil and food prices. For 2009, central bank officials are confident that the 2.5 percent to 4.5 percent target is achievable since supply-side factors on food in particular is seen to be addressed in the coming months. |
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Copyright 2008 APU Newswire. All rights reserved. Please read the End User Agreement. News provided by COMTEX |
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