Slower Philippine inflation in September leaves room for rate cuts
Core inflation, which strips out volatile food and energy prices, slows to 2.4% this month, from 2.6% in August
ANNUAL inflation in the Philippines accelerated at its slowest rate in more than four years in September, due to a slower rise in food prices and downtrend in transport costs, giving the central bank room to cut interest rates further.
The consumer price index rose 1.9 per cent in September from a year earlier, the smallest increase since May 2020. It was also less than the previous month’s 3.3 per cent print, and below the 2.5 per cent forecast in a Reuters poll.
Inflation could settle around 3.2 per cent after last month’s data, said Finance Secretary Ralph Recto. This is within the central bank’s target of 2 to 4 per cent.
“This gives the BSP (Bangko Sentral ng Pilipinas) more room to be aggressive in its monetary policy easing to help the economy grow at a faster rate, and support the government in increasing its revenue collections,” Recto said.
The Philippine central bank said on Friday (Oct 4) inflation is expected to trend downwards in the succeeding quarters, on easing supply pressures from food and base effects from higher consumer prices last year.
“The balance of risks to the inflation outlook continues to lean towards the downside for 2024 and 2025, with a slight tilt to the upside for 2026,” it added.
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It brought year-to-date average inflation to 3.4 per cent.
Core inflation, which strips out volatile food and energy prices, also slowed to 2.4 per cent in September, from 2.6 per cent in August.
Deceleration in food inflation last month was driven by a significant slowdown in rice price increases to 5.7 per cent, from 14.7 per cent in August. This was due to base effects and the impact of reduced tariffs.
The central bank, which cut its policy rate by 25 basis points to 6.25 per cent in August – the first reduction in nearly four years – will meet on Oct 16 to decide on the direction of interest rates.
Its governor Eli Remolona has said two cuts of 25 basis points each, one in October and another in December, were possible with inflation easing. REUTERS
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