The minimum wage and jeepney fares for this month may continue to increase in June.fl
According to GlobalSource Partners, the recent inflation rate in the Philippines is providing further justification for the Bangko Sentral ng Pilipinas (BSP) to resume its monetary tightening measures next month.
On Monday, Diwa C. Guinigundo, a country analyst at GlobalSource, stated that the nationwide implementation of a P1 provisional increase in jeepney fares on Sunday may result in inflationary impacts, including the potential disruption of inflation expectations.
Moreover, the implementation of a wage order requiring a P40 increase in the daily minimum wage for workers in private establishments in Central Luzon, which significantly contributes to both output and inflation, could also contribute to higher inflation rates.fl
“In an October 9th briefing, Mr. Guinigundo discussed the dynamics of inflation,” stated Guinigundo.
The minimum wage in Cagayan Valley will increase by P30 per day, while in the Soccsksargen regions (South Cotabato, Cotabato, Sultan Kudarat, Sarangani, and General Santos City), it will increase by P35 per day. These changes have been approved by the regional wage boards and will be implemented immediately.ffect on Oct. 16.
As of July 16, the National Capital Region (NCR) has implemented a daily minimum wage increase of P40.
Mr. Guinigundo stated that the BSP may continue with its strict approach by keeping its policy rate at 6.25%. This aligns with their recent predictions of 5.8% and 3.5% inflation for 2023 and 2024. However, these factors could eventually lead to a return to tighter monetary measures.
Since March, the Monetary Board has maintained a benchmark interest rate of 6.25%. In an effort to control inflation, they have raised borrowing costs by 425 basis points (bps) since May 2022.flation.
month average to 4.9%.
In September, headline inflation increased for the second consecutive month, reaching 6.1% compared to 5.3% in August due to higher costs in food and transportation. The average for the first nine months of the year was at 4.9%.month inflation average to 6.6%.
“Considering the potential realization of these optimistic risks, and the fact that the projected 3.5% for 2024 is uncomfortably nearing the upper limit of the desired 2-4% range, we are now considering the potential for a return to tighter monetary policies starting next month,” Mr. Guinigundo, a previous vice governor of the central bank, stated.
“In order to prevent market volatility, gradual and consistent actions are to be expected.”
Even before the release of September inflation data, BSP Governor Eli M. Remolona, Jr. has signaled the possibility of an off
-increase in interest rates prior to the November meeting of the Monetary Board.
Although, according to Mr. Guinigundo, sluggish economic expansion may lead the BSP to reconsider implementing additional rate increases.
“This will be an unpopular decision. But the Philippines’ gross domestic product (GDP) continues to grow while demand pressures remain given the elevated readings of core infl
Therefore, taking action beforehand can potentially stimulate business operations rather than hinder them, according to the speaker.
The economy expanded by only 4.3% in the second quarter, falling short of expectations and marking its slowest growth in over two years. Officials had previously stated that the GDP would have to increase by 6.6% in the latter half of the year to reach the government’s target range of 6-7%.
Benjamin E. Diokno, the Secretary of Finance, and Arsenio M. Balisacan, the Secretary of the National Economic and Development Authority (NEDA), recently met.
Lier stated that there is no longer a requirement for additional tightening of monetary policy.
said it could help
According to Mr. Balisacan, increasing interest rates may have a negative impact on consumers and the economy. However, Mr. Diokno believes it could be beneficial. a great job”
Stated that the BSP has performed exceptionally well. enough”
regarding the implementation of stricter financial policies.
On November 9, the third-quarter gross domestic product information will be made available. The Monetary Board’s upcoming meeting to set policies will take place on November 16. – Luisa Maria Jacinta C. Jocson