Economy 2 MIN READ

UPDATE 1-Philippine November inflation slows, but above forecast

December 7, 2021By Reuters

Nov CPI up 4.2% y/y, above market forecasts

Core inflation at 3.3% vs 3.4% in October ready to maintain accommodative policy

Adds details, comments

By Neil Jerome Morales and Enrico Dela Cruz

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% since November last year, will review its policy settings on Dec. 16.

The Consumer Price Index rose 4.2% last month from a year earlier PHCPI=ECI, down from a 4.6% 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% for the month, and higher than the 3.9% median forecast in a Reuters poll.

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

Inflation averaged 4.5% in January-November, still outside the BSP’s 2%-4% 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.

(Reporting by Neil Jerome Morales and Enrico Dela Cruz
Editing by Ed Davies)


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