INFLATION picked up for the first time in six months in November, as prices of basic food items, electricity and gasoline rose, although it stayed below the government’s target.
The consumer price index rose 1.3 percent last month from 0.8 percent in the previous month, bringing the year-to-date average to 2.5 percent.
The Bangko Sentral ng Pilipinas (BSP) set the full year target range at two to four percent.
The central bank lowered its inflation forecast for 2019 to 2.4 percent from 2.5 percent previously, and forecast the consumer price index to rise 2.9 percent next year, with risks tilted to the upside.
The price growth uptick strengthened the central bank’s view that it can keep interest rates steady for the rest of the year.
The BSP cut the overnight borrowing rate by a total of 75 basis points this year, bringing the benchmark to four percent.
The BSP attributed the inflation pickup to rising prices of power, gasoline and key food items.
This was balanced off by the reduction in the price of rice that was made possible by the Rice Tariffication Law, a Department of Finance statement said.
Inflation for alcoholic beverages and tobacco was at 17.6 percent driving the headline rate, followed by housing, water, electricity, gas and other fuels (1.2 percent); furnishing, household equipment and routine maintenance of the house, (2.8 percent); health (3.1 percent); and communication (0.3 percent).
Slower price movements were seen for clothing, footwear, restaurant and miscellaneous goods.
Rice prices were still down by 8.3 percent compared to a year ago, while corn posted a 2.2 percent drop.
Inflation was widely expected to accelerate in November due to the fading base effect from 2018, when inflation peaked at 6.7 percent in September and October that year.
Inflation is expected to gradually approach the midpoint of the central bank’s target range in 2020 and 2021.
The BSP said risks to inflation are tilted to the upside in 2020 and to the downside in 2021, citing volatile oil prices and the potential impact of African swine fever on prices.