Philippine November inflation slows, but above forecast

08-Dec-2021 Intellasia | Reuters | 5:02 AM Print This Post

Philippine inflation in November eased to the lowest level in four months, supporting expectations that the central bank will keep its benchmark interest rates steady at its last meeting this year to support an economic recovery.

The Bangko Sentral ng Pilipinas (BSP), which has kept the rate on the overnight reverse repurchase facility (PHCBIR=ECI) at 2.0 percent since November last year, will review its policy settings on December 16.

The Consumer Price Index rose 4.2 percent last month from a year earlier (PHCPI=ECI), down from a 4.6 percent rise in October, due to a slowdown in price increases for the heavily weighted food and non-alcoholic beverages index.

The headline figure was above the central bank’s projected range of 3.3%-4.1 percent for the month, and higher than the 3.9 percent median forecast in a Reuters poll.

Core inflation (PHCPXY=ECI), which excludes volatile food and fuel prices, slowed to 3.3 percent from 3.4 percent in October, the government data on Tuesday showed.

Inflation averaged 4.5 percent in January-November, still outside the BSP’s 2%-4 percent target range this year.

“Despite the upside surprise, the BSP is expected to keep rates unchanged for the rest of 2021,” said Nicholas Mapa, a senior economist at ING.

In a statement, BSP Governor Benjamin Diokno said that while risks to the inflation outlook are tilted to the upside in 2022, they were broadly balanced for 2023.

“The BSP stands ready to maintain its accommodative monetary policy stance to support the economy’s recovery while also guarding against any emerging risks to its price and stability objectives,” he said.

The BSP has vowed to be cautious with policy levers to sustain the economy’s revival, which could be hampered by the emergence of a potentially more transmissible Omicron coronavirus variant.

“With demand soaring this quarter and expected to continue in 2022, second round effects are likely to pick up rather fast,” said Emilio Neri, lead economist at Bank of the Philippine Islands.


Category: Philippines

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