Today the National Statistics Office released the latest consumer price index (CPI) in Manila.
The year-on-year inflation jumped to 11.4% in June 2008 compared to 9.5% in May 2008. This is the highest inflation rate since May 1994 when inflation reached 11.5%. While the annual inflation rate rose to 9.2% in the National Capital Region (NCR), prices in Areas Outside the National Capital Region (AONCR) even accelerated by 12.3% in June 2008.
Excluding selected food and energy items, core inflation increased to 6.6% in June compared to 6.2% in May 2008. Prices for food, beverages and tobacco (FBT) rose by 16.5%, while services increased by 9.9% and fuel, light and water (FLW) increased by 7.6%
On June 5th, Bangko Sentral ng Pilipinas (BSP) raised its key interest rate by 25 basis points to curb inflation and to support the Philippine Peso, who lost more than 17% against the Euro and nearly 10% against the US Dollar.
On July 17th, the Philippine central bank, Bangko Sentral ng Pilipinas (BSP), will hold its next regular monetary policy meeting.
Today Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad informed the public that consumer prices rose by 3.8% in May 2008.
After the increase of fuel prices on June 5th, Malaysia’s central bank Governor Zeti Akhtar announced that Malaysia’s inflation rate may reach 5% in June 2008. For next month analysts expect electricty rates to rise. This will put additional pressure on Bank Negara Malaysia to increase interest rates to curb inflation. The next regular meeting of the central bank is scheduled for July 25th, 2008.
Since the beginning of 2008 most of the Asian governments had to cut their fuel subsidies because skyrocketing crude oil prices threatened their budget balance. As a result inflation rates increased to their highest level in may 2008. The central banks of India, Indonesia and the Philippines already raised their key interest rates this June and Malaysia and Thailand are expected to follow at their next central bank meetings.
At the moment the GDP is still growing at a respectable level but recent data already shows a remarkable decline in consumer confidence. With high inflation and further possible rate increases investors will have to find better places to invest their money than in the stock market.
| country |
GDP growth (YoY) |
inflation (may 08) |
key interest rate |
local currency vs EURa) |
| India |
8.8% |
7.9% |
8.00%1) |
-14.1% |
| Indonesia |
6.3% |
10.4% |
8.50%2) |
-4.1% |
| Malaysia |
7.1% |
3.8% |
3.50%3) |
-3.8% |
| Philippines |
5.2% |
9.6% |
5.25%4) |
-13.0% |
| Thailand |
6.0% |
7.6% |
3.25%5) |
-17.4% |
a) since 31.12.2007
1) On June 5th, 2008 Bank Indonesia raised its key interest rate by 25 basis points to 8.5%.
2) On June 4th, 2008 the Reserve Bank of India raised its key interest rate by 25 basis points to 8%.
3) On May 26th 2008 Bank Negara Malaysia kept its key interest rate unchanged (no change since April 2006)
4) On June 5th, 2008 Bangko Sentral ng Pilipinas raised its key interest rate by 25 basis points to 5.25%.
5) On May 21st, 2008 Bank of Thailand kept its interest rate unchanged (no change since August 2007)
