Philippine Inflation Accelerates Less Than Economists EstimatedNorman P. Aquino and Max Estayo
Philippine inflation accelerated less than economists estimated in December, giving the central bank room to keep interest rates low and support growth.
Consumer prices rose 2.9 percent from a year earlier, after a 2.8 percent advance reported earlier for November, the National Statistics Office said in Manila today. The median in a Bloomberg News survey of 10 economists was 3.1 percent.
A stronger peso has helped make imports cheaper, even as Bangko Sentral ng Pilipinas takes measures to stem capital flows. The monetary authority lowered borrowing costs four times last year, and it’s difficult to justify further cuts if the economy is strong and inflation is benign, Governor Amando Tetangco said.
“Local food prices have remained relatively stable and price pressures have been easing because of the strong peso,” Marc Bautista, head of research at Metropolitan Bank & Trust Co. in Manila, said before the release. “BSP can keep policy rates at 3.5 percent for the whole year if inflation pressure doesn’t increase.”
The Philippine peso fell 0.2 percent to 40.845 against the U.S. dollar as of 9:03 a.m. in Manila, according to Tullett Prebon Plc. It advanced to the strongest level in almost five years yesterday.
The central bank held its benchmark rate at a record-low 3.5 percent last month after the economy grew 7.1 percent in the third quarter, and said it targets inflation to average 3 percent to 5 percent until 2014. The impact of damage to crops and infrastructure from Storm Bopha last month may be seen in 2013, Economic Planning Secretary Arsenio Balisacan has said.
Core inflation was 3.3 percent in December, today’s release showed. Food and non-alcoholic beverage costs rose 2.3 percent from a year earlier, compared with a 2.2 percent gain in November. Alcoholic beverages and tobacco climbed 5.1 percent.