Philippine inflation in October holds at 9½-year high

MANILA: Philippine annual inflation steadied in October at its highest rate in almost a decade as costlier fuel and utilities countered slower increases in food prices, likely keeping the central bank on course for further policy tightening.

It was the first time this year that inflation in one of Asia’s fastest-growing economies has steadied, although economists had expected it to ease, prompting forecasts of another interest rate increase when policymakers meet next week.

The consumer price index rose 6.7% last month from a year earlier, the same pace as in September, although surpassing the median estimate of 6.5% in a Reuters’ poll of economists. The central bank had forecast inflation within a range of 6.2-7% for the month.

Core inflation, which strips out volatile food and fuel items, quickened to 4.9% in October from 4.7% in September, the Philippine Statistics Authority said. That was the highest on record based on government data that goes back to January 2013.

“Core inflation is still rising which to me, outside of the supply factors, suggests demand conditions remain strong,” said Nomura economist Euben Paracuelles.

“The case for a rate hike is still there,” said Paracuelles, who sees another 100basis point increase over the next six months including a 25-bps hike at the next meeting on Nov 15. – Reuters