PHILIPPINE inflation came in sharply slower than anticipated in October, giving policymakers reason to pause their most aggressive monetary tightening in two decades.

Consumer prices rose 4.9 per cent from a year ago, the statistics agency said on Tuesday (Nov 7). That’s well below the 5.6 per cent median forecast in a Bloomberg survey of 24 analysts, and the central bank’s 5.1 per cent to 5.9 per cent projection.

“If we don’t see any supply shocks, our view is that inflation rate will go down,” National Statistician Dennis Mapa said in a briefing when asked on the trend in price gains over the next two months. The October print was the slowest since July and brought the year-to-date average to 6.4 per cent. Core inflation, which strips out the impact of volatile food and energy prices, eased to 5.3 per cent from 5.9 per cent in September.

The Philippine central bank’s key interest rate is likely to be held steady at the Nov 16 policy meeting, according to Finance Secretary Benjamin Diokno on Monday who said: “There’s no justification for higher interest rates” given easing inflation.

The central bank raised its benchmark rate to a fresh 16-year high of 6.5 per cent in an out-of-cycle move on Oct 26 and signalled that it’s ready to deliver “follow-through policy action” if necessary to bring inflation back to its 2 per cent to 4 per cent target. The next day, Bangko Sentral ng Pilipinas governor Eli Remolona said they may either stand pat or increase the key rate by a quarter percentage point depending on incoming data.

Food inflation slowed to 7.1 per cent last month from 10 per cent in September, with price gains in national staple rice easing to 13.2 per cent from a 14-year high of 17.9 per cent in the prior month, data showed.

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“Rice inflation slowed down following the onset of peak harvest and import arrivals,” Economic Planning Secretary Arsenio Balisacan said, adding that the stable supply of vegetables also helped cool inflation.

But Balisacan warned of the risks to food prices going forward with El Nino expected to linger until mid-2024. “As inflation eases, it is crucial to continue monitoring the prices of commodities, particularly food, transportation, and energy amid global challenges such as geopolitical uncertainties and El Nino,” he said. BLOOMBERG