Philippine inflation increased slightly in November but remained within the central bank’s expectations, providing room for further interest rate cuts.
According to the Philippine Statistics Authority on Thursday, consumer prices rose 2.5% year-on-year, aligning with the average estimate from economists in a Bloomberg survey.
Although inflation picked up for the second consecutive month, it fell within the central bank’s forecast range of 2.2% to 3%.
However, core inflation, which excludes volatile food and energy prices, stood at 2.5%, marking its first increase since March 2023.
The latest data aligns with the central bank’s “assessment that inflation will continue to trend closer to the low end of the target range in the near term,” according to Bangko Sentral ng Pilipinas (BSP).
The BSP noted that this reflects easing supply pressures on key food items, especially rice, and stated that it will take this information into account during its rate-setting meeting on 19th December.
“The BSP will continue to maintain a measured approach in its easing cycle to ensure price stability conducive to sustainable economic growth and employment,” it said.
Faster increases in overall food prices contributed to higher inflation in November, despite a decline in rice inflation to 5.1% from 9.6% the previous month, according to data.
National Statistician Claire Dennis Mapa indicated in a briefing that rice price increases are expected to ease further.
Furthermore, November’s inflation rate, which falls within the central bank's 2% to 4% target for the year, supports the case for further monetary easing. The central bank has already cut its benchmark key rate by a total of 50 basis points since August.
Central Bank Governor Eli Remolona stated last month that both a rate cut and a pause will be considered during this month’s meeting. He noted that while the central bank remains in an easing cycle, signs of price pressures could lead policymakers to maintain the current rate.
Additionally, slower-than-expected economic growth in the previous quarter might encourage the continuation of the easing cycle, while the Peso's weakness against the strong US Dollar could prompt the central bank to keep its key interest rate unchanged.
“Even with a pickup in headline and core readings in November, Philippine inflation remains benign. The bigger picture is that this should give Bangko Sentral ng Pilipinas room to keep its easing cycle going next year.
But we think it will opt to hold at its next meeting on 19th December to ensure inflation expectations remain firmly anchored,” said Tamara Mast Henderson, Asean economist at Bloomberg Economics.