Inflation creeps up in November, stays below target


Posted at Dec 05 2019 09:06 AM | Updated as of Dec 05 2019 09:02 PM

A woman arranges cartons of eggs at her store in Kamuning Market in Quezon City. Jonathan Cellona, ABS-CBN News/file

MANILA -- (UPDATE) Inflation picked up for the first time in 6 months in November while staying below the government's target, strengthening the view that the Bangko Sentral ng Pilipinas can keep interest rates steady for the rest of the year.

The consumer price index rose 1.3 in November from 0.8 percent in the previous month. The BSP set the full year target range at 2 to 4 percent. 

November inflation matched the median forecast of 10 economists in a Reuters poll and was within the 0.9 to 1.7 percent prediction of the BSP's think tank.

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Benign inflation "does not justify any further action" to ease monetary policy, said ATR Asset Management head of research Jomar Lacson. The BSP cut the overnight borrowing rate by a total of 75 basis points this year, bringing the benchmark to 4 percent.

Inflation for alcoholic beverages and tobacco was at 17.6 percent, driving the headline rate, the PSA said, followed by housing, water, electricity, gas, and other fuels (1.2 percent); furnishing, household equipment and routine maintenance of the house, (2.8 percent); health, (3.1 percent); and communication (0.3 percent).

Inflation was expected to accelerate in November due to fading base effect from 2018, when inflation peaked at 6.7 percent in September and October that year. The same Reuters poll gave a 2.5 percent median forecast for average inflation in 2019.

The November data is "consistent with the BSP’s prevailing assessment that inflation has bottomed out in October and is expected to gradually approach the midpoint of the target range in 2020 and 2021," the central bank said.

Risks to inflation are tilted to the upside in 2020 and to the downside in 2021, the BSP said, citing volatile oil prices and the potential impact of African Swine Fever.

Central Bank Governor Benjamin Diokno earlier said a fourth interest rate cut was still possible at the central bank's Dec. 12 policy meeting, which would be the last for the year.