‘Wage hike won’t affect prices much’

MANILA, Philippines - The recently announced wage hike for workers in the National Capital Region (NCR) is not expected to have a significant impact on domestic prices, the Bangko Sentral ng Pilipinas said.

“That’s within the broad assumption of the Bangko Sentral. Our (inflation) forecast (announced) in July... already incorporates this adjustment in wages for NCR (National Capital Region) for non-agricultural workers,” BSP deputy governor Diwa C. Guinigundo said.

The Labor department last week announced a P10 increase for minimum wage earners in Metro Manila. This brings the minimum wage to P466 from the previous level of P456.

Guinigundo explained that the 2.2-percent increase in the minimum wage is within the adjustment assumed by the central bank when it cast its inflation forecast in July.

In fact, he stressed the BSP assumed wages will start increasing in August, a month earlier than what the government recently announced.

Therefore, Guinigundo said the wage hike will have “no incremental impact on our (inflation) forecast.”

The BSP expects inflation to average at 3.3 percent this year and four percent in 2014.

For 2015, inflation is expected to hover at 3.5 percent.

Guinigundo said the BSP is set to review these forecasts on Thursday, when the Monetary Board meets to revisit policy settings.

“We have to update (the forecasts)... with the latest developments,” Guinigundo said.

Inflation has slowed to a four-year low of 2.1 percent in August, bringing year to date average to 2.8 percent. This is below the central bank’s three- to five-percent target range.

The August inflation data will be considered when the BSP reassesses its forecasts, Guinigundo said.

At the same time, the adjustment in fuel pump prices, the rise in domestic liquidity, and prices of utilities, among others, will also be considered by the central bank.