Philippine inflation slows, yet more curbs expected
MANILA: Philippine headline inflation slowed for the first time this year as the increase in food and transport costs eased, but a higher core inflation and weak currency are likely to prompt the central bank to continue hiking interest rates.
The consumer price index (CPI) rose 6.3% in August, the Philippine Statistics Authority said yesterday.
It matched the median forecast in a Reuters poll and was within the central bank’s projected range of 5.9% to 6.7% for the month.
Core inflation, however, which strips out volatile food and fuel items, accelerated to 4.6% from July’s 3.9%.
“Bangko Sentral ng Pilipinas (BSP) is prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term,” BSP said in a statement, adding upside risks continue to dominate the inflation outlook.
Inflation in the January to August period averaged 4.9%, exceeding this year’s BSP target band of 2% to 4%.
The BSP expects inflation to average 5.4% this year, and ease to average 4% next year and 3.2% in 2024.
The BSP has raised interest rates by 175 basis points this year, taking the benchmark overnight reverse repurchase facility rate to 3.75%, in efforts to bring inflation back within target and support a sagging peso.
The peso has further lost ground against the bullish US dollar, however, hitting a record low of 56.99 on Monday, as the greenback surged ahead of the US Federal Reserve’s (Fed) widely expected interest rate hike later this month.
Ahead of the BSP’S Sept 22 policy-setting meeting, its governor, Felipe Medalla, on Friday told a Reuters Newsmaker event the magnitude of a US rate hike will be a big factor in the BSP’S decision on whether to tighten policy further. — Reuters*