Philippine Inflation Quickens to Five-Month High on Food Prices
Philippine inflation accelerated to the fastest in five months in February on higher food prices, limiting the central bank’s scope to cut interest rates further and discourage capital inflows.
Consumer prices rose 3.4 percent last month from a year earlier, after a 3 percent advance reported in January, the National Statistics Office said in Manila today. The median in a Bloomberg News survey of 16 economists was 3.3 percent.
The central bank held borrowing costs at 3.5 percent in January while cutting rates on special deposit accounts to help curb capital inflows that boosted the peso and drove stocks to a record last week. Consumer prices will be within target this year and the monetary authority can harness a number of policy options to address flows while ensuring a stable currency, Deputy Governor Diwa Guinigundo said on March 3.
The inflation rate in 2013 will probably be higher than last year, Eugenia Victorino, a Singapore-based economist at Australia & New Zealand Banking Group Ltd., said before the report. Still, price gains “will remain in the lower half of the 3 percent-to-5 percent target band of the central bank. We stand by our expectation for Bangko Sentral ng Pilipinas to keep benchmark interest rates on hold throughout the year.”
The Philippine peso rose 0.1 percent to 40.74 against the U.S. dollar as of 9:05 a.m. in Manila. It is the biggest gainer in the past 12 months among 11 widely traded Asian currencies tracked by Bloomberg.
The economy grew 6.8 percent last quarter from a year earlier, among the fastest expansions in Asia. The BSP’s next policy meeting is scheduled for March 14.
The core inflation rate was 3.8 percent in February, today’s release showed. Food and non-alcoholic beverage costs rose 2.9 percent from a year earlier, compared with a 2.3 percent gain in January. Alcoholic beverages and tobacco climbed 29 percent on higher taxes.
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