Economic news that matters

According to the Institute for Development and Econometric Analysis, Inc. (IDEA), the Bangko Sentral ng Pilipinas reported that the Philippines’ financial system has been resilient since the height of the 2008 global economic crisis, due to the sustained implementation of key reforms and the improving macroeconomic environment. The sector saw a 31.4-percent growth in banks’ net profit, an 11.6-percent expansion in total resources, continued core lending growth of 8.7 percent, a 9.6-percent growth in deposits, and a liquid assets-to-deposits ratio of 59.7 percent, among others.

However, per same published report the country’s year-on-year headline inflation rate rose to 4.5 percent in April, from 4.3 percent in March. All the commodity groups, except for the food, beverage, and tobacco index (FBT), recorded high values for inflation. April last year also saw an inflation rate of 4.5 percent. Core inflation moved up to 3.8 percent in April from 3.5 percent in March. This excludes selected food and energy prices. Annual inflation in the National Capital Region (NCR) also rose to 4.2 percent. Growths were higher in all commodity groups, bar FBT and clothing index. Annual inflation in areas outside NCR also rose to 4.6 percent. Annual increases for all commodity groups recorded high values except for FBT and miscellaneous items index.

Moreover, prices of consumer items also proved to be higher in April 2011. From 0.3 percent in March, consumer prices climbed to 0.8 percent in April. This increase was attributed to the rapid increase in the fuel, light, and water index (FLW) in NCR, which was brought about by the increase in charges in electricity rates. Increases in the monthly electricity rates and in kerosene prices also contributed to the upward trend.

Furthermore, ninety-one-day Treasury bills dipped to 0.568 percent, 11.2 basis points lower than 0.68 percent awarded during the April 18 auction. National Treasurer Roberto Tan attributed the dip to the “good news on the country’s fiscal performance” and high market liquidity. The seasonally adjusted consumer price index (CPI) on food, beverage, and tobacco (FBT) items in the National Capital Region (NCR) went down to 159.7 in April from 159.9 in March. Areas outside NCR retained its March figure equal to 176.4. Prevalence of favorable weather conditions and abundance in the supply of vegetables and in-season fruits helped in pushing the prices of FBT items down. However, the same cannot be said for non-FBT items, as their seasonally adjusted CPI in NCR and areas outside NCR reach 177.7 and 172.5 in April, respectively from 176.2 and 171.1 in March, respectively.

Overall, the exchange rate slipped to Php42.93 per dollar within the week. An over-the-phone interview with a trader revealed that the peso closed weak since investors were trying to avert risks because of some disappointing news regarding weaker global growth. Policy rates were once again increased by the Monetary Board as the National Statistics Office released their inflation rates report. The report indicates that the inflation rate in April 2011 increased to 4.5 percent from March’s 4.3 percent. The Monetary Board noted that the inflation forecasts suggest that the 3 to 5 percent inflation target is still at risk. This is mainly a result of “expected pressures” from oil prices, according to IDEA.

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