March 5 (Bloomberg) -- Philippine consumer prices rose at the fastest pace in 16 months in February as food prices climbed, making it less likely the central bank will cut its benchmark interest rate next week.

Consumer prices gained 5.4 percent from a year earlier, following a 4.9 percent increase in January, the National Statistic Office said today in Manila. The median estimate of 12 economists in a Bloomberg News survey was for a 5.3 percent rise. The number was announced a day earlier than expected.

Bangko Sentral ng Pilipinas has cut its policy rate five times since July, helping drive the economy to its fastest growth in 31 years in 2007. The central bank expects average inflation within 3 percent to 5 percent in 2008 amid rising oil and food prices. Prices have been contained by gains in the peso, which is close to the highest against the dollar.

``It makes sense for the central bank to pause'' from cutting rates, said Song Seng Wun, an economist at CIMB-GK Research in Singapore. ``It would have to consider that the strong peso is making imported goods cheaper.''

Food, beverage and tobacco prices rose 6.8 percent, compared with 5.9 percent in January, and costs of services climbed 5.9 percent from 5.4 percent. Fuel, light and water inflation slowed to 4.6 percent, from 5.5 percent in January.

The peso and benchmark stock index fell on concern rising prices may deter investors. The currency dropped 0.25 percent to 40.70 per dollar as of 11:03 a.m. in Manila, according to Bloomberg data. The stock gauge lost 0.25 percent to 3,100.92.

Higher Rice Prices

Prices of rice, corn, pork and cooking oil rose last month, according to the Bureau of Agriculture Statistics. Food prices account for half of the price index.

``Lower prices of petroleum products due to the tariff reduction and lower electricity rates helped mitigate the impact of elevated food prices,'' central bank Governor Amando Tetangco said on Feb. 29, when he forecast prices rose 4.8 percent to 5.5 percent. Oil and commodity prices remain ``key risks,'' he said.

The Philippines is the world's biggest importer of rice and also buys almost all its oil and wheat from abroad. The peso, Asia's best performer in the past 12 months, has restrained increases in imported commodity prices.

Policy makers, who cut the overnight borrowing rate to 5 percent on Jan. 31, next meet on March 13.

To contact the reporter for this story: Clarissa Batino in Manila at cbatino@bloomberg.net.

Last Updated: March 4, 2008 22:19 EST