Inflation kicks up to 1.1% in November

MANILA, Philippines — Inflation kicked up to 1.1% in November from a record low of 0.4% in October due to a sharp increase in food prices, data released by the Philippine Statistics Authority (PSA) showed on Friday, December 4.

November's inflation fell within the 0.4% to 1.1% forecast of the Bangko Sentral ng Pilipinas (BSP) as inflation likely bottomed out at 0.4% in September and October.

BSP Governor Amando Tetangco Jr said monetary authorities would monitor external developments as inflation bottomed out in September and October with credit and domestic liquidity growth rates also stabilizing.

"These signal that our stance of policy right now is appropriate,” Tetangco said.

The BSP’s Monetary Board is set to hold its last policy-setting meeting for the year on December 17. (READ: Second half will be better – economists)

Interest rates kept

The central bank has kept interest rates steady for 9 straight policy setting meetings since October last year.

Tetangco said the BSP would continue to monitor development, particularly actions of advanced economies including the decision of the impending normalization of interest rates by the US Federal Reserve, as well as the decision of the European Central Bank (ECB) to cut interest rates.

"The ECB cut rates a bit shallower than some anticipated.  We will see how the balance of this possible US lift-off this month and further moves from Chinese authorities would impact on domestic price and growth dynamics," the BSP chief said.

Lower than anticipated

Inflation averaged 1.4% in the first 11 months of the year from 4.3% in the same period last year. This was lower than the BSP inflation target of between 2% and 4% this year.

The rise in the consumer price index was primarily due to the higher annual rate in the heavily-weighted food and non-alcoholic beverages index as it advanced by 1.7% from a previous month’s growth of 0.7%.

The government also noted faster annual increments in the indices of alcoholic beverages and tobacco; clothing and footwear; furnishing, household equipment and routine maintenance of the house; health; transport; recreation and culture; and restaurant and miscellaneous goods and services.

Excluding selected food and energy items, core inflation went up 1.8% in November from 1.5% in October.

At the national level, annual mark-ups were higher in the indices of eight out of the 11 commodity divisions. 

The indices of communication and education retained their previous month’s rates, while the index of housing, water, electricity, gas and other fuels continued to exhibit a negative rate of 1.2%.

On an annual basis, the country’s food alone index accelerated by 1.7% in November from 0.7% in October.

A double-digit annual growth of 12% was recorded in the vegetable index while faster annual add-ons were also seen in the indices of other cereals, flour, cereal preparation, bread, pasta, and other bakery products at 1.2%; meat, 0.9%; fish and fruit, both at 3.6%; and sugar, jam, honey, chocolate, and confectionery, 3.9%.

The rest of the food groups moved slower with the index for corn having a zero growth. Declines were, however, observed in the indices of rice at -2.4% and oils and fats, -0.1%.

Inflation in the National Capital Region (NCR) picked up to 1% in November from 0.2% in October, while inflation in areas outside NCR increased by 1.1% from 0.5%.

The BSP has further lowered its inflation forecast to 1.4% instead of the previous projection of 1.6% because of the continuing softening of oil prices as well as other food prices.

Likewise, inflation forecast for 2016 was reduced to 2.3% instead of 2.6%, and for 2017 to 2.9% instead of 3%, amid the continued decline in oil and other commodity prices, and economic growth fueled by continued consumer spending. – Rappler.com

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