WEAK PESO WON'T STOKE INFLATION, STANDARD CHARTERED BANK NOTED

The recent weakness of the peso is not expected to exacerbate the current inflation uptrend, a global research report by Standard Chartered Bank noted. “The Philippine peso has been the worst-performing Asian currency relative to the US dollar so far in January, falling 1.86 percent year-to-date. However, we do not think this weakness will translate into domestic price pressures,” StanChart said. With this, StanChart said it would maintain its inflation forecast of 3.9 percent in 2014, higher than the three percent in 2013. “We expect inflation to rise from 3.5 percent in fourth quarter 2013 to 3.9 percent in Q1 2014, 4.2 percent in Q2, and 4.3 percent in Q3, before falling to 3.3 percent in Q4,” it said. Inflation, it said, is likely to peak in the third quarter of 2014, but will remain below the five percent upper end of the Bangko Sentral ng Pilipinas inflation target. With the expected jump in inflation this year, StanChart said it expects policy rate hikes only in the third and fourth quarter this year by a total of 50 basis points to four percent by end-2014. But the study pointed out that the weakening of the local currency would greatly affect domestic oil prices.

ALSO: State of the Union: President Obama Faces Divided Small Business Community on Wage Hike

US President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington President Obama has pledged to tackle inequality in the US during his State of the Union address, but has not pushed for a federal minimum wage rise. Although Obama is expected to sign an executive order for government contract workers, which will boost their pay from the minimum federal rate of $7.25 (£4.37, €5.30) per hour to $10.10, he called on Congress to approve a raise. But a poll from CNN, which questioned 1,278 employers, revealed small business owners in the US are divided over a potential country-wide increase in the minimum wage. Almost half (49%) of employers, for instance, said they do not support a proposal to raise the federal minimum wage, but 44% said they support a wage hike and the remaining 7% were unsure. However, a vast majority (95%) of respondents agreed that $7.25 is not a living wage and only 7% said they pay any of their workers that hourly rate or the minimum set by their state.

ALSO: US Government Urged to Raise Minimum Wage by Economic Nobel Laureates

US Government Urged to Raise Minimum Wage by Economic Nobel Laureates. Here, demonstrators demand an increase in worker wages march in Oakland, California in December 2013. The US government was urged by 75 economists, seven of which were recipients of the Nobel Prize in Economic Sciences, to raise the minimum wage for the country's workers. According to a letter by the lobby group, the economic heavyweights have asked the government to increase the hourly minimum wage to $10.10 by 2016, from $7.25, after highlighting that research shows that higher pay does not lead to less jobs. Among signatories of the letter are Nobel Prize winners Kenneth Arrow, Peter Diamond, Eric Maskin, Thomas Schelling, Robert Solow, Michael Spence and Joseph Stiglitz. "[Past increases in hourly pay have had] little or no negative effect on the employment of minimum wage workers, even during times of weakness in the labor market," said 75-strong group of economists. "A minimum wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings." US President Barack Obama pledged in his 2013 State of the Union message to provide a nationwide increase in the minimum wage to $9 despite legislative pushes being stalled at the Congress level. He said that "no one who works full time should have to live in poverty.''


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Weak peso won’t stoke inflation StanChart says, policy rate hikes expected in third, fourth quarters

MANILA, FEBRUARY 3, 2014 (PHILSTAR) By Donnabelle L. Gatdula - The recent weakness of the peso is not expected to exacerbate the current inflation uptrend, a global research report by Standard Chartered Bank noted.

“The Philippine peso has been the worst-performing Asian currency relative to the US dollar so far in January, falling 1.86 percent year-to-date. However, we do not think this weakness will translate into domestic price pressures,” StanChart said.

With this, StanChart said it would maintain its inflation forecast of 3.9 percent in 2014, higher than the three percent in 2013.

“We expect inflation to rise from 3.5 percent in fourth quarter 2013 to 3.9 percent in Q1 2014, 4.2 percent in Q2, and 4.3 percent in Q3, before falling to 3.3 percent in Q4,” it said.

Inflation, it said, is likely to peak in the third quarter of 2014, but will remain below the five percent upper end of the Bangko Sentral ng Pilipinas inflation target.

With the expected jump in inflation this year, StanChart said it expects policy rate hikes only in the third and fourth quarter this year by a total of 50 basis points to four percent by end-2014.

But the study pointed out that the weakening of the local currency would greatly affect domestic oil prices.

“The greatest impact of a weaker peso is likely to be on energy inflation, as Brent crude becomes more expensive in peso terms. We think that commodity price fluctuations have a greater impact on inflation than the peso alone,” it said.

In terms of components, it noted that peso changes are likely to have a greater impact on clothing and footwear, furnishing and household equipment, and restaurant/miscellaneous goods and services.

“These items likely include a higher percentage of imported products,” it said.

Combined, it said “these components account for 18.2 percent of the consumer price index basket, versus 61.5 percent for the food and housing/energy components; therefore the impact of foreign exchange fluctuations is not that significant.”

“While we expect the peso to have some inflationary impact on the domestic economy, we do not see sufficient upside to cause the BSP any significant concern,” added.

FROM THE INT'L BUSINESS TIMES

State of the Union: President Obama Faces Divided Small Business Community on Wage Hike By IAN SILVERA | January 29, 2014 11:56 AM GMT

US President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington President Obama has pledged to tackle inequality in the US during his State of the Union address, but has not pushed for a federal minimum wage rise.

Although Obama is expected to sign an executive order for government contract workers, which will boost their pay from the minimum federal rate of $7.25 (£4.37, €5.30) per hour to $10.10, he called on Congress to approve a raise.

But a poll from CNN, which questioned 1,278 employers, revealed small business owners in the US are divided over a potential country-wide increase in the minimum wage.

Almost half (49%) of employers, for instance, said they do not support a proposal to raise the federal minimum wage, but 44% said they support a wage hike and the remaining 7% were unsure.

However, a vast majority (95%) of respondents agreed that $7.25 is not a living wage and only 7% said they pay any of their workers that hourly rate or the minimum set by their state.

But the research also revealed more than 20% said they pay some employees between $7.25 and $10.10 an hour.

That means if a federal wage hike is passed, these small business owners would have to raise wages for employees in that range.

In addition, the study found nearly three in ten (26%) of small business owners said a hike to $10.10 would cause them to cut back on employees or their hours and almost a third (32%) said they would be forced to raise their prices.

US Government Urged to Raise Minimum Wage by Economic Nobel Laureates By LIANNA BRINDED | January 14, 2014 08:52 AM GMT 2 5 1 submit to reddit Share on emailShare on print


Thousands of US Fast Food Workers Strike Against Low Wages McDonald's, Taco Bell and Wendy's Workers Strike over Pay Last summer, thousands of fast food workers across the US staged strikes over pay.

US Government Urged to Raise Minimum Wage by Economic Nobel Laureates. Here, demonstrators demand an increase in worker wages march in Oakland, California in December 2013. The US government was urged by 75 economists, seven of which were recipients of the Nobel Prize in Economic Sciences, to raise the minimum wage for the country's workers.

According to a letter by the lobby group, the economic heavyweights have asked the government to increase the hourly minimum wage to $10.10 by 2016, from $7.25, after highlighting that research shows that higher pay does not lead to less jobs.

Among signatories of the letter are Nobel Prize winners Kenneth Arrow, Peter Diamond, Eric Maskin, Thomas Schelling, Robert Solow, Michael Spence and Joseph Stiglitz.

"[Past increases in hourly pay have had] little or no negative effect on the employment of minimum wage workers, even during times of weakness in the labor market," said 75-strong group of economists.

"A minimum wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings."

US President Barack Obama pledged in his 2013 State of the Union message to provide a nationwide increase in the minimum wage to $9 despite legislative pushes being stalled at the Congress level.

He said that "no one who works full time should have to live in poverty.''

The organisers of the industrial action across more than 100 cities have called for the country's federal minimum wage to be increased to $15 per hour.

Actions were seen in New York, Chicago, Washington, as well as Detroit, Michigan and many other US cities.

In particular, 100 protestors in Chicago marched along Michigan Avenue, one of the second city's biggest streets, chanting "we can't survive on $7.25".

The current minimum wage level means someone working 40 hours per week, 52 weeks per year, receives an annual income of only $15,080, according to the Economic Policy Institute.

The think tank claimed the figures mean families with two or more children on the minimum wage, will be below the country's poverty line.

Only 2.2% of jobs in the fast food industry are managerial, professional, or technical occupations, according to the National Employment Law Project (NELP).

The organisation also said front-line workers make up a vast majority (89.1%) of all jobs in the fast food industry and receive a median hourly wage of $8.94 per hour.

In contrast, the NELP said first-line supervisors, with a median hourly wage of $13.06 per hour, make up the remaining 8.7% of jobs in the fast food industry


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