Philippine inflation slows to 1-year low in November

Reuters

Posted at Dec 05 2014 10:24 AM | Updated as of Dec 05 2014 06:24 PM

MANILA - Philippine annual inflation slowed for the third straight month in November, bolstering expectations the central bank will leave interest rates on hold at next week's policy meeting and longer before resuming its tightening cycle.

The consumer price index was up 3.7 percent last month, its slowest rise since November 2013 and lower than the 4 percent forecast by economists in a Reuters poll.

Core inflation, which takes out volatile items, was 2.7 percent from last year against a forecast of 2.9 percent in the Reuters poll.

The central bank had expected annual inflation in November to be at 3.5-4.3 percent.

The central bank left policy rates unchanged at its October 23 meeting after five consecutive tightening moves, but left the door open to hike again if the risk of higher inflation emerges. The central bank next meets on Dec. 11.

Data released on Nov. 27 showed the Philippine economy slowed to its weakest pace in more than five years in the third quarter, hurt by a decline in public spending and farm output and signalling a longer-than-expected pause in the central bank's tightening cycle.

Following the release of third quarter GDP data, Bangko Sentral ng Pilipinas Governor Amando Tetangco said the central bank's current policy should help support economic activity, pointing to a generally manageable inflation outlook.

The latest money supply data showed M3 growth in October at its slowest in about one and a half years, after peaking at more than 30 percent early this year.

Based on its October estimates, the central bank expects average inflation this year to reach 4.4 percent, compared with the previous 4.5 percent forecast, and 3.7 percent in 2015 versus an earlier 3.8 percent projection.