Business Report 7

Philippines inflation hits
14-yr high
Agence France-Presse . Manila

Rising food and energy prices in the Philippines pushed its June inflation rate to 11.4 per cent, the highest level in 14 years, the government said Friday.
The upturn exceeded the forecasts of both the central bank and many private analysts who had expected inflation to range from 10.4 to 11.2 per cent.
This was also the highest rate since May 1994 when inflation hit 11.5 per cent, the National Statistics Office said in a statement.
Central bank governor Amando Tetangco signalled the monetary authority's plan to tighten monetary policy.
'While inflation continues to be influenced by supply-side pressures, there are indications that such pressures have started to feed into demand, with core inflation steadily rising since December 2007,' Tetangco said in a statement.
'Monetary authorities have acted last month to address risks to inflation and they stand ready to adjust monetary policy settings further as and when necessary to achieve the price stability objective,' he added.
The central bank began tightening its key interest rates last month, for the first time since 2005, after the May inflation figure spiked at a readjusted rate of 9.5 per cent.
The overnight borrowing rate rose to 5.25 per cent while the overnight lending rate was increased to 7.25 per cent, both by 25 basis points.
The government said Friday that the upsurge in inflation was due to 'soaring prices of rice nationwide along with the upward adjustments of other food items such as flour and flour products, fruits and vegetables and meat in selected regions.
'Tuition fee hikes and the series of upward adjustments in petroleum products also contributed to the uptrend,' the statement said.
The school season began last month.
Economic planning secretary Augusto Santos said cereals prices surged 42.2 from a year earlier, with fuel prices up 22.0 per cent while transportation and communication jumped 12.4 per cent.
Excluding selected food and energy items, core inflation rose to 6.6 per cent in June from 6.2 per cent in May, the office said.
The June figure brings inflation in the first half of the year to 7.6 per cent.
The central bank originally forecast inflation for the whole year at 3.0 to 5.0 per cent.
'The current inflation is consistent with the central bank outlook that inflation will reach double-digits beginning in June this year,' Tetangco said.
'The inflation path is expected to peak in the third quarter of 2008 and decline thereafter toward single-digit levels in 2009, as price increases in food and oil may not be sustainable.'

Baosteel agrees with BHP Billiton
on iron ore price increase
Xinhua . Beijing

Baosteel, China's largest steel maker, said Friday it had agreed with BHP Billiton on a price increase of up to 96.5 per cent for iron ore in 2008, nearly double that of 2007.
The prices were to increase by 79.88 per cent to 96.5 per cent, respectively, depending on the category of iron ore, the company said in a statement on its website.
'As an outcome of these negotiations, the iron ore prices for Newman Fine Ore and Yandi Fine Ore, increased by 79.88 per cent, and the price for Newman Lump Ore increased by 96.5 per cent relatively to 2007,' said Baosteel in a web announcement.
The price rise is in line with experts' predictions and followed the settlement between Baosteel and Australian miner Rio Tinto last week.
Baosteel, which negotiated on behalf of China's steel industry, said on June 23 it agreed to a 79.88 per cent price hike for Pilbara blend fines and Yandicoogina fines and a 96.5 per cent price rise for Pilbara Blend Lump for the contract year starting on April 1.
Baosteel agreed in February on a 65 per cent price rise for iron ore from Brazilian miner Vale. Rio Tinto and BHP Billiton then demanded a 'freight premium,' claiming it costs less to ship iron ore from Australia to China.