Quicker Philippine Inflation Weighs Against Further Rate Cuts

Inflation in the Philippines accelerated to its fastest in 20 months in November on higher food and beverage costs, giving the central bank reason to pause on further rate cuts.

Consumer prices last month climbed 3.3% from a year earlier, compared with 2.5% in October, the Philippine Statistics Authority said Friday. November figures exceeded the 2.6% median estimate in a Bloomberg survey and the central bank’s 2.4%-3.2% forecast range.

Benign inflation allowed monetary policy makers to cut the key interest rate to a record-low 2% last month to fire up the country’s sluggish recovery from the worst of the pandemic. Their next rate-setting meeting is scheduled for Dec. 17.

“They will likely hold and assess the general direction of inflation,” said Dan Roces, chief economist at Security Bank Corp. in Manila.

Only the day before, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the risk to the inflation outlook remained on the downside given a strong peso and tepid consumer spending, while cautioning that the bank’s monetary policy actions may take longer to impact the economy.

The peso was at 48.035 to a dollar as of 9:13 a.m. local time, its highest since September 2016 and up 5.4% so far this year.

Other Highlights:

  • Inflation January-November was at 2.6%, still within the Philippines’ revised target of 2.4%-2.6% for the whole year
  • Inflation for food alone picked up 4.5% in November from 2.1% the previous month, the statistics authority said, citing the impact of recent typhoons
  • The November inflation was the fastest since March 2019, when the rate of price increases was also at 3.3%
  • Inflation in the Philippine capital region accelerated to 3.5% last month from 2.5% in October

— With assistance by Michael J Munoz, Clarissa Batino, Cecilia Yap, and Michael Arnold

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