PHILIPPINE APRIL INFLATION a staggering 8%!!!!

[tidus1203]

Damn it! Our inflation for April (annualized) is 8% give and take. For the people who have not taken their economics 101, this simply means that compared to April last year, this year the prices of basket of good increased by 8% annualized. To add salt to the injury our interest rates is only 6% give and take. Meaning we have a negative rate of return on our money. This are very troubling times, better be prepared. Although I have not been preaching this for awhile but in a different thread I am preaching and still continue to believe that we should get HARD ASSETS. Paper money is pretty much worthless (somewhat of an exaggeration), gold, land and anything that can't be multiplied are good assets to own on this time of distress...

[badsekktor]

blessing in disguise pala pagkakabili namin ng mga lupa....

[1D4LV]

Damn it! Our inflation for April (annualized) is 8% give and take. For the people who have not taken their economics 101, this simply means that compared to April last year, this year the prices of basket of good increased by 8% annualized. To add salt to the injury our interest rates is only 6% give and take. Meaning we have a negative rate of return on our money. This are very troubling times, better be prepared. Although I have not been preaching this for awhile but in a different thread I am preaching and still continue to believe that we should get HARD ASSETS. Paper money is pretty much worthless (somewhat of an exaggeration), gold, land and anything that can't be multiplied are good assets to own on this time of distress...

actually, i was a bit surprised it only 8%. i was realistically thinking that its around 10%.

interest rate is 6% saan yan? i think interest rates are at around 4% on the average.
although i would agree on the hard assets part, most people would i think prefer to have liquid assets where they can dispose of immediately during times of need.

[tidus1203]

Thats the interest rates the banks get from the central bank (aka the cash rate) but you are right para sa atin its not that high... EVen the banks are getting killed by inflation. And also I want to concur that the government almost always understates inflation. Double-digit is more likely if the more important goods like rice and oil are given more weight in the computation of inflation...

[1D4LV]

Thats the interest rates the banks get from the central bank (aka the cash rate) but you are right para sa atin its not that high... EVen the banks are getting killed by inflation. And also I want to concur that the government almost always understates inflation. Double-digit is more likely if the more important goods like rice and oil are given more weight in the computation of inflation...

i agree bro. government really understates inflation figures. ah ok, the 6% pala is the CB rate, so for the banks to earn something, they just give around 3-4% sa consumers nila.

[tidus1203]

Yes thats how they do it. Maliban sa loans they buy short term debt securities (mostly Tbills and maybe short term paper as long as 3 years) from the government or yes deposit it to the central bank themselves (unfortunately the central bank does not accept money from individuals )

Many believe the inflation we are experiencing now is a cost-push inflation rather than monetary policy, so mukang ibig sabihin nyan we just have to tighten our belts since no monetary policy adjustment can solve this. And the central bankers are just crossing their fingers that we tighten our belts enough and demand falls and inflation tames down again....

[niky]

It's global inflation, man. All across the third world, countries are suffering near double-digit inflation in the cost of food staples, due to the food crisis and the effects of biofuel farming.

[tidus1203]

I know its a world-wide issue especially on poor countries, buti pa place like Europe only has 3.2% inflation :D Australia the best they have 4% inflation but their interest rates is 7.25%

[Galactus]

i agree bro. government really understates inflation figures. ah ok, the 6% pala is the CB rate, so for the banks to earn something, they just give around 3-4% sa consumers nila.

Banks earn more from commercial and consumer loans (with 9% as the prime rate, but some commercial and savings bank offer up to 19% on loans). Compared to their average 2% deposit rate, that's a 7 to 12% spread. That's where the banks get their bread and butter.

Minimal lang naman ang portfolio ng mga banko sa GS (government securities) and the BSP rediscounting facilities.

[tidus1203]

Depende yan bro. During the Asian financial crisis most of the banks money (if may natira pa ) was placed with the central bank and GS. No one wanted to loan out with customers or businesses after the asset bubble of the Asian tigers bursted back in 1997.

[Galactus]

Bro, if you examine naman the financial statements of the banks during the Asian financial crisis, most of the earnings came from interest income, and not from non-interest income (trading of GS, ROPs, etc). Meaning, most of their portfolio pinasok talaga sa loans. Also, AFAIK, the BSP mandates a cap on how much a bank can trade on government securities, and obligado talaga silang magpautang to certain sectors (agri-agra, microfinance). Mas naging mapili lang sila on whom to extend credit during that time.