Philippines inflation close to 14-year excessive; extra fee hikes seen By Reuters

By Neil Jerome Morales and Enrico Dela Cruz

MANILA (Reuters) – Philippine inflation accelerated to its quickest tempo in practically 14 years in October and the speed is prone to rise additional, the statistics company stated on Friday, backing expectations the central financial institution will preserve tightening financial coverage.

The patron value index climbed 7.7% in October from a yr earlier, the quickest rise since December 2008, pushed by value good points in key commodity teams, notably meals and non-alcoholic drinks. It outpaced the 7.1% median forecast in a Reuters ballot.

The headline determine additionally got here in close to the highest finish of the central financial institution’s 7.1% to 7.9% forecast for the month.

Inflation in January-October averaged 5.4%, properly exterior the central financial institution’s full-year goal vary of two% to 4%.

Indicating broadening value pressures, core inflation – which strips out risky meals and gasoline – hit 5.9% in October from an upwardly revised 5.0% in September, the Philippine Statistics Authority stated.

The statistics company sees a “substantial likelihood” that inflation may enhance additional in November, partly due to the influence of a current harmful tropical storm.

Reacting to the information, the financial planning company stated the federal government was dedicated to offering fast reduction to cushion the influence of rising inflation.

Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla stated on Thursday the central financial institution will hike its key rates of interest by 75 foundation factors at its Nov. 17 coverage assembly to match the most recent financial tightening by the U.S. Federal Reserve.

The BSP supposed to take care of the rate of interest differential prevailing earlier than the newest Fed fee hike, with a view to mood any influence on the nation’s trade fee, he stated.

The peso, Southeast Asia’s worst-performing forex, has misplaced greater than 13% in opposition to the U.S. greenback thus far this yr.

The BSP, which has thus far raised charges 5 instances this yr by a complete of 225 bps to deliver its benchmark in a single day reverse repurchase facility fee to 4.25%, will maintain its final coverage assembly of 2022 on Dec. 15.

“We anticipate the central financial institution to hike once more in December, probably matching any transfer from the Fed to shut out the yr,” stated ING senior economist Nicholas Mapa.