Inflation remains high at 4.9% in August

According to the Institute for Development and Econometric Analysis, Inc. latest NewsBriefs, in August 2014, inflation settled high at 4.9percent, up from the 2.1percent registered a year earlier. Netting out price-volatile food and energy items, core inflation surged to 3.4percent.

The food index alone primarily fueled inflation by accelerating 8.7percent. Prices of rice, vegetables, and unclassified food products, however, eased down their annual growth. Higher electricity rates, diesel and gasoline prices were also observed.

By region, the consumer price index shot to 4.4percent in the National Capital Region, while CPI slowed to 5percent in Areas Outside NCR compared from their July 2014 levels.

National Economic Development Authority’s Director-General Arsenio Balisacan says the government’s rice importation and the harvest season for corn will augment food supply. In the short term, ensuring supply sufficiency particularly in agricultural products will be key in staving off inflationary pressures. He also added that measures must already be in place in areas highly vulnerable to the potential El Niño episode late this year.

The Monetary Board is set to meet on September 11 to discuss possible policy actions. Last month’s data has effectively brought year-to-date inflation at 4.4percent, still within the government’s full year target range of 3-5percent.

Furthermore according to the same published report, the Philippine Statistics Authority announced that inflation in August 2014 hovered high at 4.9percent, as core inflation, which excludes certain food and energy items, reached 3.4percent, its highest since March 2013. This recent information has prompted experts to speculate on an imminent tightening of policy as the Monetary Board meets late next week.

Likewise per IDEA, the Bangko Sentral ng Pilipinas (BSP) reports that the country racked up $80.785 billion in gross international reserves by the end of August 2014, up from the $80.644 billion by the end of July 2014. The BSP attributes the ample amount of GIR to its foreign exchange operations, investments abroad, and the net foreign currency deposits of the Treasurer of the Philippines.

Moreover, the government’s tax effort in the first half of 2014 stood at 13.75percent of the country’s gross domestic product, an increase from the 13.59percent posted a year earlier. Revenue efforts were also up, hitting 15.57percent of GDP. Amid concerns over the government’s under-spending, Finance Secretary Florencio Abad assures that spending will improve in the third quarter on the back of disaster rehabilitation and PPP projects.

Lastly it was reported that, South Korean credit rating agency, National Information and Credit Evaluation Ratings, Inc., has recently upgraded the Philippines’ investment grade status to BBB-,along with a positive outlook. The agency has cited improved macroeconomic fundamentals, robust financial and external sectors, as well as the country’s bright growth prospects, according to the researchers of IDEA. [email protected].