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Meralco signals over P1 per kWh rate rise in February

THE COST of electricity in February will increase by P1.08 per kilowatt-hour (kWh), Manila Electric Co. (Meralco) said on Thursday, pointing to higher pass-through generation charge.

Meralco said the increase “will not be implemented in full, in the interest of consumer welfare.” It made the statement in an online message ahead of its regular monthly issuance on power rates.

The increase follow two straight decreases in the overall electricity rates that amounted to a total P0.90 per kWh for a typical household.

Meralco told its consumers “to await the official announcement on the final rate adjustment for February, and how the remainder of the increase will be implemented.”

“Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 31 months, after these registered reductions in July 2015,” it said.

It reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines.

It added that taxes and other public policy charges such the feed-in-tariff allowance are remitted to the government.

In January, the country’s biggest distribution utility announced a decrease in power rates of P0.5260 per kWh.

The rate decrease for the month brought the overall rate to P8.7227 per kWh from P9.2487 per kWh previously. A typical residential customer with a 200-kWh consumption will their monthly bill reduced to around P105.

Those consuming 300 kWh, 400 kWh and 500 kWh will see a reduction of P157.8, P210.4 and P263, respectively.

The reduction is the second straight month of decrease in overall electricity rates, the company said, placing the total reduction at P0.9045 per kWh in the two-month period. — Victor V. Saulon

BoI approves Mulgrave stake increase in Cebu-based Rose Pharmacy chain

THE Board of Investments (BoI) said it approved Dutch retailer Mulgrave Corp. BV’s application to invest in Rose Pharmacy, Inc., amid plans to take up a majority stake in the Cebu-based chain.

In a statement Thursday, the BoI said Mulgrave hopes to take its stake in Rose Pharmacy to 51% from 49%.

Rose Pharmacy has 252 branches nationwide.

BoI Managing Head Ceferino S. Rodolfo said that Mulgrave also expressed its intention to invest more to expand its operations in the Philippines.

“The BoI is seeing increasing interest of foreign investors in the Philippines to access the expanding domestic market,” he added.

“This reflects the sustained confidence of foreign investors in the country’s economy.”

In a separate statement, Rose Pharmacy said Mulgrave’s stake remains at 49% and described the BoI approval a “pre-qualification certificate.” It added that no agreement for a stake increase is currently in place.

Citing Bangko Sentral ng Pilipinas data, the Philippines received $7.9 billion worth of foreign direct investment in the first 10 months of 2017, up 20.5% higher year on year.

Mulgrave, a unit of Hong Kong’s Dairy Farm International Holdings, Ltd., the retail arm of Bermuda-registered trading firm Jardine Matheson Group, has prequalified to enter the market as a foreign retailer under the Retail Trade Liberalization Act.

The company operates supermarkets and hypermarkets, restaurants, and other retail brands in Asia such as Wellcome, Cold Storage, 7-Eleven and Ikea.

In the Philippines, Mulgrave owns a part of Rustan’s Supermarkets, Shopwise, and General Nutrition Center.

The Retail Trade Liberalization Act is intended to heighten  market competition, driving down prices and at the same time ensuring better goods and services to consumers.

To qualify for BoI approval, a foreign retailer needs a five-year retail track record with at least five retail branches overseas, among others.

These companies are also required to have a minimum paid-up capital of $2.5 million. — Anna Gabriela A. Mogato

This item was updated to reflect the following statement issued by Rose Pharmacy in response to this story. The statement in full reads as follows:

“We are aware of recent reporting regarding an increase in Mulgrave Corporation B.V.’s shareholding in the Company to 51%. The Company can confirm that Mulgrave’s interest remains at 49% and understands that there is no agreement to increase its interest at this time. It is understood that Mulgrave holds a BOI pre-qualification certificate allowing it to increase its shareholding should such an opportunity arise. However, Mulgrave has no agreement to increase its shareholding in the Company at this time.”

Nation at a Glance — (02/09/18)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Peso weakens amid volatility in markets

THE PESO declined against the dollar on Thursday, February 8, amid continued volatility in global markets and as the Bangko Sentral ng Pilipinas (BSP) kept its policy rates steady.

The local currency ended Thursday’s session at P51.31 versus the greenback, 19 centavos weaker than the P51.12-per-dollar close on Wednesday.

The peso traded weaker the whole day as it opened at P51.23 against the US currency. Its intraday low stood at P51.40, while its best showing was at P51.18 versus the greenback.

Dollars traded declined to $896 million Thursday from the $1.03 billion that changed hands on Wednesday.

“The peso depreciated after the BSP kept its policy rates steady,” Guian Angelo S. Dumalagan, market economist of Land Bank of the Philippines, said in an e-mail on Thursday.

The central bank held fire at its policy review Thursday. Rates were kept at 3.5% for the overnight lending rate, 3% for the overnight reverse repurchase rate, and 2.5% for the overnight deposit rate.

Bets on BSP tweaking its benchmark interest rates by 25 basis points arose after the faster inflation print last month. These expectations drove the peso upwards for two days.

For a trader, meanwhile, the weaker peso against the dollar was on the back of the volatility in the bond and stock markets, as he saw “stronger dollar demand across the board” in the afternoon trading session.

“What we’ve been seeing is the move in interest rates as well as the volatility in the equity market, so [the dollar-peso has] been dictated by these huge moves,” the trader said over the phone.

“Now, the sentiment is that sometimes, there’s a risk-off mood and when that happens, we see flight to safety which is to buy dollars.”

Mr. Dumalagan added that the $300-billion spending deal in the US Senate, as well as the affirmation of San Francisco Fed President John C. Williams of gradually increasing its rates, “also weakened the peso against the greenback.”

For today, the trader said the peso may move between P51.30 and P51.50, while Mr. Dumalagan gave a wider range of P51.10 to P51.50.

“The dollar might strengthen amid generally hawkish signals from Fed Kaplan, Fed Harker, Fed Kashkari, and Fed George,” Mr. Dumalagan said.

Most Asian currencies weakened against the US dollar on Thursday as market participants adjusted positions as persistent volatility in regional equities lowered risk appetites.

Against a basket of six major currencies, the dollar was steady at 90.242, just shy of a two-week high of 90.40 touched on Wednesday.

MSCI’s broadest index of Asia-Pacific shares outside Japan  was little changed, staying near its six-week low touched on Tuesday. — K.A.N. Vidal with Reuters

ICTSI to complete expansion of Iraq terminal by Q3 2019

International Container Terminal Services, Inc. (ICTSI) is expects the expansion of its terminal in Iraq to be completed by the third quarter of 2019.

The Razon-led port operator said in a statement the Basra Gateway Terminal (BGT) Phase 2 expansion will cost around $250 million.

“On completion of the current second phase expansion scheme, ICTSI will have invested in excess of $250 million, the lion’s share of which is for a new berth, yard construction, and state-of-the-art handling equipment,” ICTSI said.

The Phase 2 expansion will deliver 400 meters of new quay with a draft of 14 meters, together with a new 30-hectare yard area and a 15-hectare secure parking area.

“Underlining BGT’s ongoing commitment to maintaining high service levels, the latest round of development also includes the acquisition of a cutter suction dredger with the dual objective of ensuring strict adherence to the construction schedule and maintaining draft alongside the terminal’s new and existing births,” the company added.

The second phase development was triggered by strong demand, ICTSI said.

Last year, BGT, an ICTSI subsidiary, completed the first phase of its terminal greenfield project, which includes the construction of a new 250-meter berth and a 15-hectare yard area.

The subsidiary also undertook the development of quay and yard areas configured for the safe and efficient handling of oil and gas project cargo.

“Our commitment to helping Iraq develop international standard port infrastructure continues to expand,” said Hans-Ole Madsen, ICTSI senior vice president and regional head of Europe, Middle East, and Africa.

“We invested for the long term in fixed infrastructure since day one. We continue to receive strong and most encouraging assistance from the General Company for Ports in Iraq and other government bodies in this respect. We are confident that we can continue to build on this productive partnership to the benefit of port users and the country as a whole,” added Mr. Madsen. — Patrizia Paola C. Marcelo

North Korea says no plans to meet US officials at Olympics

SEOUL — North Korea has no intention of meeting US officials during the Winter Olympics that start in South Korea on Friday, state media reported, dampening hopes the Games will help resolve a tense standoff over the North’s nuclear weapons program.

US Vice-President Mike Pence, who described North Korea as the world’s most tyrannical regime on Wednesday, flies in to South Korea on Thursday ahead of the opening ceremony in the mountain resort of PyeongChang, just 80 km (50 miles) from the heavily armed border with North Korea.

The ceremony will also be attended by a senior delegation of North Korean officials, including the younger sister of leader Kim Jong Un and the North’s nominal head of state, Kim Yong Nam.

The sister, Kim Yo Jong, and other members of her entourage will travel by private jet to Seoul’s Incheon International Airport on Friday afternoon, North Korea informed the South on Thursday.

However the prospect of talks, which Mr. Pence downplayed but left open, appeared slim.

“We have never begged for dialogue with the US nor in the future, too,” the North’s KCNA news agency reported on Thursday, citing Jo Yong Sam, director-general of the North American department of North Korea’s foreign ministry.

“Explicitly speaking, we have no intention to meet with the US side during the stay in South Korea … Our delegation’s visit to South Korea is only to take part in the Olympics and hail its successful holding,” Mr. Jo said.

South Korea wants to use the event to re-engage with North Korea and open the way for talks to resolve one of the world’s most dangerous crises, in which US President Donald J. Trump and Pyongyang have swapped nuclear threats.

Mr. Pence had said after meeting Japanese Prime Minister Shinzo Abe in Tokyo on Wednesday that Washington would soon unveil “the toughest and most aggressive round of economic sanctions on North Korea ever.”

He said before departing for Seoul the United States wanted to peacefully dismantle North Korea’s nuclear program but warned Pyongyang not to underestimate US military strength or resolve.

In Beijing, Chinese foreign minister Wang Yi told reporters that China saw the Olympics as a first step towards “everyday, uninterrupted” dialogue.

All sides, not just the two Koreas, needed to work hard and dialogue between the United States and North Korea should be expanded for this to happen, Mr. Wang said.

“You can’t have it that one person opens the door and another closes it,” he said.

MILITARY PARADE
North Korea marked the founding anniversary of its army with a large military parade in Pyongyang on Thursday, a government official told Reuters, having last month changed the date of the celebration to the eve of the Olympics. The official asked not to be identified because of the sensitivity of the issue.

Domestic media reports said the parade was smaller than those of previous years.

Mr. Pence will meet South Korean President Moon Jae-in in Seoul later on Thursday. On Friday, before he attends the Olympic opening ceremony, he will visit a memorial for 46 South Korean sailors killed in 2010 in the sinking of a warship that Seoul blamed on a North Korean torpedo attack.

Mr. Pence is taking the father of Otto Warmbier, an American student who died last year after being imprisoned in North Korea for 17 months.

Kim Yo Jong, the 28-year-old sister of the North Korean leader, will be sitting in the same stadium as VIP guests along with ceremonial head of state Kim Yong Nam.

She will be the first member of the Kim family to cross the border into the South. Kim Yo Jong is a propaganda official and was blacklisted last year by the US Treasury department over alleged human rights abuses and censorship.

Japan’s Mr. Abe, whose nation has been within range of North Korean missiles for decades, will also attend the ceremony, adding to seating complications for the hosts.

South Korea asked the United Nations (UN) on Wednesday for an exemption to allow a UN-sanctioned North Korean official, Choe Hwi, to attend the opening ceremony with Kim Yo Jong.

The Unification Ministry in Seoul said no decision had been made yet on Choe Hwi and Pyongyang had not mentioned any change in their plans to send him.

A group of 280 North Koreans arrived in South Korea on Wednesday to support athletes from the two sides at the Games. The group included a 229-member cheer squad, taekwondo performers, journalists and the sports minister.

Preliminary competition at the Games began on Thursday, with events including curling and ski jumping. — Reuters

US Senate leaders reach bipartisan budget deal on eve of shutdown deadline

WASHINGTON — US Senate leaders said Wednesday they had reached a bipartisan budget deal for 2018 and 2019 — a move which, if approved by Congress, would avert a second government shutdown in just three weeks.

The deal, months in the making, was seen as a major achievement for both the ruling Republicans and opposition Democrats in a deeply divided Washington.

The breakthrough came on the eve of a midnight Thursday deadline for Congress to pass a stopgap spending measure — its fifth since October — or once again turn the lights out on the federal government.

The proposal would lift caps on federal spending that were mandated under a 2011 law, boosting military and nonmilitary funding by some $300 billion in total, aides said.

“The compromise we’ve reached will ensure that, for the first time in years, our armed forces will have more of the resources they need to keep America safe,” Senate Majority Leader Mitch McConnell said on the Senate floor.

Republican Senator Lindsey Graham, a defense hawk, said it was the “best news for the military… since 2011.”

The agreement would also ensure funding for domestic priorities pushed by Democrats including disaster relief, health centers and fighting a surging opioid epidemic.

“The budget deal doesn’t have everything Democrats want, it doesn’t have everything the Republicans want, but it has a great deal of what the American people want,” top Senate Democrat Chuck Schumer told his colleagues.

The deal raises the debt ceiling until March 2019, postponing a potential fiery clash within President Donald J. Trump’s own Republican Party, and essentially clears the decks for Congress to address other thorny issues such as immigration and infrastructure.

Before the deal was announced, the House passed a partisan bill that would fund government for six weeks and the military through the remainder of fiscal year 2018.

The Senate is now expected to rewrite that measure, pass it and send it back for House approval before Thursday’s funding deadline — provided there are no efforts to slow the process in the Senate.

‘HAPPY’ WHITE HOUSE
Messrs. McConnell and Schumer said the deal was the product of extensive negotiations between both parties and the White House, which reacted positively to developments on Capitol Hill.

“We’re certainly happy with the direction that it’s moving,” press secretary Sarah Sanders said, adding that the White House would need to see the final components.

That was a turnaround from Tuesday, when Mr. Trump had said he would “love” a shutdown if he did not get his way on immigration.

Several Senate Democrats, including John Tester of Montana, said they were buoyed by the deal but wanted to study the details before signing on.

House Speaker Paul Ryan urged all House members to support the deal, saying it breaks the “logjam” on public priorities and “will ensure that America’s armed forces have more of the resources they need to keep America safe.”

But the compromise could face stiff blowback in the lower chamber of Congress, where fiscal conservatives may balk at adding $300 billion to the national debt just months after passing a $1.5-trillion tax cut package.

But liberal stalwarts might also revolt over the sensitive issue of immigration and the fate of millions of undocumented migrants.

Immigration is not part of the compromise. Instead, Mr. McConnell will allow an open debate on possible immigration solutions on the Senate floor, beginning as early as next week — a promise he made to end a three-day shutdown last month. — AFP

Rescuers brave aftershocks as Taiwan quake toll rises

HUALIEN — Taiwanese rescuers continued the terrifying task Thursday of searching for survivors in a dangerously leaning apartment block that was partially toppled by a quake, despite regular aftershocks coursing through the building’s tottering structure.

At least ten people were killed and dozens remained missing after a 6.4 magnitude quake hit the popular eastern tourist city of Hualien late Tuesday.

The powerful tremor left a handful of buildings badly damaged — some of them leaning at precarious angles — as well as roads torn up and hundreds forced to shelter in local schools and a stadium.

The major focus for emergency responders remained the Yun Tsui apartment block where six of the deaths occurred and dozens are still missing.

The lower floors of the 12-storey tower — which also housed a hotel — pancaked, leaving the structure leaning at a fifty-degree angle and sparking fears of an imminent collapse.

Despite those risks rescuers kept going into the building throughout Wednesday night and Thursday morning in a desperate search for survivors.

Strong aftershocks continued to strike Thursday sending rescue teams scurrying from the building, only for them to return a little while later and resume their grim task.

Chu Che-min, the Hualien fire department’s rescue team leader at the scene, told AFP they located two more bodies overnight.

“We discovered the body of a Chinese woman at the hotel in Yun Tsui (building) earlier this morning and located another person who’s a hotel staffer,” he said.

A Red Cross worker at the scene estimated that the building had tilted another 5% overnight, adding he had little hope of finding survivors on its lowest floors.

“Floors one to three are all compressed so it’s hard to tell whether there are people,” he told AFP, requesting anonymity.

He said that there was no risk of a gas explosion in the building but the aftershocks and further slippage remained a persistent danger.

In a updated toll, the national fire agency said ten people had now been confirmed killed in the quake including three Chinese mainland nationals.

At least 66 people remain unaccounted for across the city, the national fire agency said. In the apartment block, 37 people are missing from flats alongside 10 hotel guests. More than 250 people were injured in the tremor, the strongest to hit Hualien in decades. — AFP

Main index declines anew ahead of BSP decision

STOCKS closed in negative territory again on Thursday, Feb. 8, as investors awaited the results of the local central bank’s first policy meeting for the year.

The bellwether Philippine Stock Exchange index (PSEi) dropped 0.25% or 22.48 points to finish at 8,645.08.

The broader all-shares index, meanwhile, posted a gain of 0.16% or 8.59 points to 5,094.67.

“I think investors opted to sell on strength after [Wednesday]’s rally. Considering that 8,550 was breached…, investors probably decided to cut losses for fear of another round of correction,” Garie G. Ouano, research director at Chinabank Securities Corp., said via text.

The market saw thinner trading as 1.03 billion issues valued at P7.11 billion switched hands. This is lower than the P9.08-billion turnover recorded on Wednesday.

“Value turnover was also below average so that could indicate that the market was on wait-and-see mode ahead of the BSP (Bangko Sentral ng Pilipinas)’s policy decision,” Mr. Ouano said.

“At their first meeting of the year, we expect the BSP to leave policy rates unchanged, keeping the overnight reverse [repurchase] rate at 3.00% and the overnight deposit rate at 2.50%. However, we see the risk that the BSP sounds meaningfully more hawkish than their meeting in December,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message ahead of the meeting’s close.

The BSP kept rates unchanged at Thursday’s meeting, it announced after the close of trading, on the back of robust economic prospects and expectations of a moderation in inflation.

Property was the lone sub-index that gained on Thursday, adding 0.20% or 7.92 points to 3,920.35.

The mining and oil counter led the day’s losers, giving up 0.98% or 115.06 points to 11,538.72, followed by industrials, which dropped 0.38% or 44.92 points to 11,712.34. Financials shed 0.31% or 7.02 points to 2,205.45; services dipped 0.16% or 2.74 points to 1,711.91; while holding firms moved 0.03% down or 2.83 points to 8,752.29.

Advancers trumped decliners, 107 to 92, while 60 issues remained unchanged.

Foreigners continued their selling spree on Thursday, with net outflows recorded at P556.30 million, slightly lower than the P598.98 million posted the day before.

Most Southeast Asian stock markets edged lower on Thursday, signaling caution, as Wall Street’s early gains overnight fizzled out, leaving investors wary of further volatility in the global markets.

US stocks ended lower on Wednesday as bond yields climbed higher, and the threat of rising inflation kept investors on edge over the prospect of more interest rate hikes.

In Asia trade, the S&P e-mini futures slid 0.30%, suggesting the likelihood of another uncertain session on Wall Street, while MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.10%. — Arra B. Francia with Reuters

Meralco power rates to increase this month

The cost of electricity in February will increase by P1.08 per kilowatt-hour (kWh), Manila Electric Co. (Meralco) said, pointing to higher pass-through generation charge.

Meralco said the increase “will not be implemented in full, in the interest of consumer welfare.” It made the statement in an online message ahead of its regular monthly issuance on power rates.

The increase follows two straight decreases in the overall electricity rates that amounted to a total P0.90 per kWh for a typical household.

Meralco told its consumers “to await the official announcement on the final rate adjustment for February, and how the remainder of the increase will be implemented.”

“Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 31 months, after these registered reductions in July 2015,” it said.

It reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corporation of the Philippines. It added that taxes and other public policy charges such the feed-in-tariff allowance are remitted to the government. — Victor V. Saulon

Faster price pickup seen till June

INFLATION RATE will likely keep rising until June as the second-round effects of tax reform creep in, an analyst at a global bank said yesterday, adding that this in turn could trigger three rate hikes from the central bank this year.

Jose Mario I. Cuyegkeng, senior economist at ING Bank N.V. Manila, said inflation will likely average “at least four percent or higher” for 2018, reeling from the impact of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN), that was enacted in December and which took effect last month.

“I think within the first half of the year, we’ll probably see a peak. Once we get the second-round effects… we expect that to happen within the next three months,” Mr. Cuyegkeng said on the sidelines of ING Bank’s annual financial markets road show yesterday.

He added that monthly inflation could clock “closer to 4.5%” before easing.

January inflation surprised at four percent, the fastest in over three years to hit the ceiling of the 2-4% target range set by the Bangko Sentral ng Pilipinas (BSP), against a market expectation of 3.5%.

State economic managers attributed January’s price spike partly to effects of the tax reform law, as well as to rising oil and food prices. However, BSP Governor Nestor A. Espenilla, Jr. said TRAIN’s impact is likely temporary and that inflation rate would eventually “stabilize.”

Mr. Cuyegkeng said last month’s faster-than-expected inflation pace bolstered the case for a tightening move from the Monetary Board, as he now prices in three rate hikes for 2018.

He added that there is now a 50% chance for the BSP to adjust rates at its policy meeting today.

“Now, there is a case to be made that the central bank has limited choices to stave off any policy rate hikes,” Mr. Cuyegkeng said at the forum, noting that such tightening would help anchor inflation expectations over the next 12-18 months.

“A two-peso increase in minimum transport fares would eventually mean that inflation will still rise by another half percentage point or more,” he added, pointing out that petitions for higher daily minimum wages would likewise have an impact on overall inflation.

The bank economist has also bumped up his inflation forecast from 3.7% previously, which was already above the 3.4% full-year estimate announced by the central bank in December.

By 2019, Mr. Cuyegkeng sees inflation to remain elevated at 3.5-3.6%, coming from another wave of sin tax increases for alcohol and tobacco products.

Despite this, he still expects the Philippine economy to sustain robust growth at 6.7%, matching the pace logged in 2017 on the back of household, public and business spending, as well as growth of industry and services.

The government’s ambitious spending goals for infrastructure may be doable, as he cited “significant improvement” in 2017 budget disbursements.

Despite rising inflation rates, Mr. Cuyegkeng said overheating risks have somehow eased following a moderation in the growth in bank lending and money supply.

ING chief economist Robert Carnell noted in the same event the continued underperformance of the peso against other Asian currencies, which Mr. Cuyegkeng attributed to a widening trade deficit as businesses import more capital equipment and other requirements of expansion. — Melissa Luz T. Lopez

BSP chief faces first major test

BANGKO SENTRAL ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. faces his first major test on Thursday: striking a balance between curbing inflation and calming financial markets.

Inflation is at the highest in more than three years, the currency is under pressure and financial markets are experiencing wild moves this week.

Mr. Espenilla has to decide whether now is the right time to tighten monetary policy for the first time since 2014 to prevent one of Asia’s fastest-growing economies from overheating.

“Bangko Sentral ng Pilipinas may finally deliver on rate hikes after the spike in inflation to four percent,” said Eugene Leow, a fixed-income strategist at DBS Group Holdings Ltd. in Singapore.

“With sentiment already jittery, higher rates may actually instill confidence in peso assets.”

Twelve of the 17 economists surveyed by Bloomberg predict the benchmark rate would be held at three percent, with the rest forecasting a hike to 3.25%.

The Philippines is among the top inflation-targeting central banks in Asia and its credibility now rests on the governor, who took office in July last year.

Policy makers in Asia face pressure to follow the US in tightening monetary policy, with Malaysia raising rates in January.

Financial market volatility is complicating the job of central bankers who seek to preserve stability while anchoring inflation and growth expectations.

In India, the central bank is forecast to hold its key rate on Wednesday.

The Philippine peso has lost more than two percent this year, the worst-performing currency in emerging markets after the Argentine peso. The Philippine currency and benchmark stock index gained on Wednesday, following an Asia shares rally.

The BSP is among the most predictable in Asia on monetary policy.

Former Governor Amando M. Tetangco, Jr. communicated potential changes in advance and the last unexpected decision was in July 2012 when authorities cut interest rates.

The implementation last month of the tax law that raised levies on fuel, sugary drinks and cigarettes is boosting inflation.

The surge in January prices was driven by food, beverages and tobacco.

VIEW FROM THE GROUND
Walking around the cramped alleys of Mega Q-Mart, one of the largest wet markets in Manila, Nenita Villamor lamented that prices of goods like chicken have gone up.

The mother of six has stopped buying poultry as the cost has risen more than 10% in recent weeks.

“I cook vegetables for my family instead of chicken which has gotten more expensive,” she said.

“We miss it but we can’t afford it now. The vendors say the price increase is because of new taxes.”

Public transport groups and ride-sharing companies Uber Technologies Inc. and Grab are calling for fare hikes, while labor unions are also seeking an increase in minimum wages.

The central bank will be closely monitoring the situation and stands ready to take timely action, Mr. Espenilla said on Tuesday.

“We’re not ruling out a rate hike,” said Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore, who forecast no change.

“The BSP is very sensitive to the inflation targets being breached. Given the tax law and oil, they probably would realize that the inflation outlook will only drift higher this year, so the target is more at risk.” — Bloomberg