MANILA -- Inflation was steady at 6.7 percent in October, the same as the previous month, as the rise in housing and utility costs picked up, while price spikes in food slowed, official data released Tuesday showed.
It was the first time this year that inflation in one of Asia's fastest-growing economies has steadied, although economists had expected it to ease, prompting forecasts of another interest rate increase when policymakers meet next week.
Economists polled by Reuters predicted a 6.5 increase in the consumer price index, at which rate, inflation would have eased for the first time in 10 months. The Bangko Sentral ng Pilipinas' think tank gave a 6.2 to 7 percent range.
Price spikes were lower in food and alcoholic beverages and tobacco and higher in housing, water and electricity, fuels, furnishings, health, transportation and recreation, National Statistician Lisa Grace Bersales said.
Bangko Sentral Governor Nestor Espenilla said the October data "supports the view that inflation pressures are finally moderating." It also "augurs well" for inflation returning to the BSP's target by next year.
"It’s a significant deceleration although the headline figure remains elevated. Second round effects are also muted so far," he said in a statement.
Socioeconomic Planning Secretary Ernesto Pernia said Sunday government's efforts to tame the price spikes were starting to be felt.
The government has suspended the second round of increase on fuel excise taxes, convinced manufacturers of basic goods to hold off on price hikes for 3 months and institutionalized several other price-taming measures directed at food.
Steady inflation in October puts the BSP on course for further policy tightening, analysts said.
Core inflation, which strips out volatile food and fuel items, quickened to 4.9 percent in October from 4.7 percent in September. That was the highest on record based on government data that goes back to January 2013.
"Core inflation is still rising which to me, outside of the supply factors, suggests demand conditions remain strong," said Nomura economist Euben Paracuelles.
"The case for a rate hike is still there," said Paracuelles, who sees another 100-basis point increase over the next 6 months including a 25-bps hike at the next meeting on Nov. 15.
The central bank has raised interest rates at its last 4 consecutive meetings by a total of 150 basis points, bringing its benchmark rate to 4.5 percent in its bid to cool inflation.