Inflation above forecast, rates seen steady

Reuters

Posted at Nov 04 2011 11:15 AM | Updated as of Nov 05 2011 12:58 AM

MANILA, Philippines - Philippine annual inflation quickened to a four-month high of 5.2 % in October, above market forecasts, but economists still expect the central bank to keep interest rates on hold at least until the early part of 2012. 

The median forecast on a Reuters poll of 11 economists was for annual inflation of 5%, using the new series based on 2006 prices. The new data series which was first released in July will become the standard for inflation reports next year.   

The index under the old data series with 2000 as the base year rose 5.3%, accelerating from the previous month's rise of 4.6%. 

Bangko Sentral governor Amando Tetangco said the 5.3% (2000 prices) inflation for October was within the BSP's forecast range.

"As expected, higher annual increments for food and utilities caused inflation in October to rise faster than the month before. As we explained before, this blip is expected to be one-off due to base effects and the impact of supply disruptions due to the weather disturbances," he said.

 "We continue to see inflation to be manageable over the policy horizon. Nevertheless we remain watchful of the impact of developments in Europe on investor sentiment and global aggregate demand. Even as we see current monetary policy settings appropriate, we have flexibility to make adjustments as necessary, especially to help preserve the growth objective,"  Tetangco added.