Wednesday, April 16, 2008 Food raises inflation but dollar to peso stable: BSP
THE local Bangko Sentral ng Pilipinas (BSP) said "the relative firmness of the peso against the US dollar continues to cushion the impact of higher imported oil and food prices on domestic inflation."
Although, BSP-Negros has no data yet on the first quarterly inflation performance, it said monthly inflation figures are already available and showed a 6.4 percent 'year-on-year' level last March, up by 1 percent compared to the 5.4 percent posted last February and 2.2 percent March last year.
The March 2008 data accounted inflationary pressures of major commodities, mainly from the increasing prices of food, including rice and corn.
Increased inflation was also recorded for fish, fruits and vegetables, meat, cereal preparations, dairy products, and miscellaneous food items, BSP-Negros said.
The data added that transportation and communication, as well as educational services, fuel and rentals significantly contributed to higher inflation while the rising cost of imported food products affected the domestic prices of rice, cereals, and dairy products.
"This is how far BSP's role can do in the so-called present food crisis. Its policy concern is price stability through the banking system so that ongoing economic expansion can be sustained. It will be on the lookout for factors that could spark inflation," BSP-Negros insiders said.
Single digit inflation is manageable, BSP added. "The demand push inflation worldwide, however, is beyond BSP control, neither is the US dollar-peso movement because our exchange rates are market-driven. So far, however, there is no significant movement in the exchange rate. BSP is literally on the 'stand by."
Meanwhile, the local BSP said it is conducting an extensive financial literacy program especially among family members of overseas Filipino workers (OFWs).
With around US$12.8-billion total remittances from abroad since last year, the BSP through its various online and convenience banking services, could make use of the remittances to expand its microfinance, thrift and rural banking services.
"These services can augment under-investments suffered by the agricultural sector, especially among cooperatives. OFW families here must be taught the value of savings which eventually translates to investments," the BSP said.
Late last year, BSP Governor Amando Tetangco Jr. was quoted as saying that the "total amount of OFW remittances of US$ 12.8 billion is equivalent to 10.9 percent of our gross domestic product. This is a huge resource that offers a lot of opportunities".
"If our savings bank can capture more deposits, it will have more funds for lending and have better opportunities to improve profitability in general," Tetangco added. (Gil Alfredo Severino)
