Possible wage hike already included in ’10 inflation forecast

June 2, 2010 8:26 pm 

MANILA, June 2 – The Bangko Sentral ng Pilipinas (BSP) is not worried on the impact of a possible wage hike in the country on this year’s inflation since this has been included in central bank’s inflation forecast.

The regional wage boards are reportedly set to issue this week its decision on the wage hike petitions, which is P75 across-the-board in Metro Manila.

BSP Governor Amando Tetangco Jr. said impact of a wage increase depends on how much and when the increase will be approved.

“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 in our assessment,” he said.

BSP’s inflation forecast this year is 5.1 percent revised upwards from 4.64 percent while the target is 3.5-5.5 percent. Next year, the target is three to five percent while the forecast is 3.7 percent, from 3.45 percent previously.

Monetary officials earlier said the 5.1 percent inflation forecast for this year was considered taking into account a P0.50 fare hike and a P25 wage hike.

The last wage hike in the country was in 2008 when the minimum was raised to P382 per day.

Historically, increase in the wages are lower than the proposals, thus, it is not feared to have a big impact on inflation.

Central bank’s policy-making Monetary Board will have its policy-meeting on Thursday and among the items in its list is the path of inflation.

Tetangco said they would really look into their forecast following the higher-than-expected 7.3 percent growth of the domestic economy in the first quarter this year.

He said they “want to take a look at the domestic growth in the context of what is happening also in the global economy and how this will affect commodity prices worldwide.

“It is something that we see as important and is going to be a part of the assessment,” he said.

Tetangco said they continue to see “within target average inflation for this year as well as next year.”

“The review will look at the impact of growth on prices as well as the effects of international developments including the debt problems in Europe and the behavior of internal commodity prices on global growth,” he pointed out. (PNA)

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