MANILA, JULY 19, 2008
(STAR) By Donnabelle Gatdula - As world crude prices soften, a whopping P3 per liter increase in diesel prices is being implemented this weekend, the highest increase so far in the fuel used by most mass transporation vehicles.

The oil firms decided to carry out what they described as a “one-time, big-time” increase even as they came under fire from consumer groups and militant organizations for allegedly taking advantage of the rising global crude costs to overcharge consumers.

After rolling back gasoline prices by P1 per liter last week, the oil firms are also raising the price again by P1 per liter.

With the latest increase, the pump prices of diesel and gasoline now approach the P60 and P63 per liter mark, respectively.

Diesel price will range from P57.48 to P59.47 per liter; unleaded gasoline, P59.10 to P62.28 per liter; and kerosene, P59.41 to P63.30 per liter.

As of late afternoon yesterday, small oil players Seaoil Philippines, Eastern Petroleum, Unioil Petroleum and Flying V had raised their diesel prices by P3.

The four oil firms will also increase the price of their kerosene products by P1.50 per liter.

Earlier, the oil firms indicated their intention to implement a “one time big time” price adjustment, purportedly to “end the agony” of the transport sector.

Prior to the P3 per liter adjustment, oil firms claimed that they had a P5 per liter under-recovery for diesel for the month of June.

But with the current oil price trend, sources said the under-recovery for diesel as of July already amounted to P2 to P3 per liter.

As of yesterday, unleaded gasoline in Mean of Platts Singapore (MOPS), the pricing benchmark used by oil importers, averaged $142.91 per barrel from its June average of $140.30 per barrel.

MOPS for diesel also soared to $175.73 per barrel from the June average of $169.36 per barrel.

Dubai crude, the price gauge of oil refiners, also went up to $137.02 per barrel from $127.82 per barrel.

However, liquefied petroleum gas or cooking gas remained steady at P633 to P689.50 per 11-kg tank.

IMF says global economy in ‘tough spot’ By Des Ferriols Saturday, July 19, 2008

The International Monetary Fund (IMF) said the global economy remains in a ‘’tough spot’’ due to rising inflation.

The IMF in an update of its World Economic Outlook said inflation is mounting in emerging economies like the Philippines, forcing policy reactions that could slow economic expansion even further.

The IMF expects economic expansion to slow down for the next two years, characterized by elevated financial risks, rising losses and credit squeeze.

The IMF said growth in the emerging economies like the Philippines is projected to ease to around seven percent this year from eight percent in 2007.

“Financial risks remain elevated, as rising losses in the context of a global slowdown could add to strains on capital and exacerbate the squeeze on credit availability,” the IMF said.

“Moreover, inflation is a rising concern and will constrain the policy response to slower growth,” the IMF said in the report.

On the positive side, however, the IMF said demand in advanced and emerging economies might be more resilient to recent commodity price and financial shocks.

“In many countries, the driving force behind higher inflation is higher food and fuel prices,” the Fund said.

The IMF said oil prices have risen substantially above previous record highs in real terms, driven by supply concerns in the context of limited spare capacity and inelastic demand, while food prices have been boosted by poor weather conditions on top of continued strong growth in demand.

According to the IMF, the increase in inflation was more marked and broader in emerging and developing economies, where headline and core inflation have risen to 8.6 percent and 4.2 percent, respectively, the highest rates since around the beginning of the current decade.

In the Philippines, inflation is expected to peak at 12 percent in October and to remain at double-digit levels until the first quarter of 2009.

As a result, the central bank had been forced to raise its interest rates by 50 basis points, a move that would slow down the inflation rate but also limit economic expansion.

The IMF noted that in economies like the Philippines, food and fuel make up a larger share of consumption baskets and sustained strong growth has tightened capacity constraints.

Looking forward in advanced economies, the IMF said inflationary pressures are likely to be countered by slowing demand and, with commodity prices projected to stabilize, the expected increase in inflation for 2008 is forecast to be reversed in 2009.

In emerging and developing countries, however, inflationary pressures are mounting faster, fueled by soaring commodity prices, above-trend growth, and accommodative macroeconomic policies.

“Hence, inflation forecasts for these economies have been raised by more than 1.5 percentage points in both 2008 and 2009, to 9.1 percent and 7.4 percent, respectively,” the IMF said.

On the growth front, the IMF said the outlook for the United States, the world’s biggest economy, is not as dire as initially projected.

The latest forecast calls for a 1.3-percent expansion in 2008, in the second upward revision in the past month for the United States. The IMF maintained its call from last month’s update of 0.8-percent US growth for 2009.

The new projection is based on incoming data for the first half of the year, the IMF said, while indicating a recession remains possible for the US economy.

Chief News Editor: Sol Jose Vanzi

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