Inflation snaps 5-month downtrend, rises to 1.3% in November

MANILA, Philippines (Updated, 11:13 a.m.) — Consumer price growth picked up in November, snapping five consecutive months of decline, the Philippine Statistics Authority reported Thursday.

Inflation accelerated to 1.3% in November versus the preceding month’s 0.8% and 6% recorded a year ago. Year-to-date, inflation averaged 2.5%, still within the government’s 2%-4% annual target.

According to the PSA, higher prices of alcohol and tobacco mainly pushed up last month’s inflation. Higher utility costs and fuel prices also put upward price pressure in November.

Meanwhile, prices of rice continued its downtrend and fell 8.3% during the month. Prices of corn, a popular rice substitute, contracted 2.2%.

“With the previous year’s base effect beginning to fade, we should see inflation gradually rise from here,” ANZ Research said in a commentary.

In a statement, the Bangko Sentral ng Pilipinas — whose primary mandate is to ensure price stability — said the latest inflation outturn was “consistent” with its assessment that price growth “has bottomed out in October.”

The BSP added that inflation will likely speed up next year partly due to volatile global oil prices and the impact of the African swine fever outbreak. But risks to the inflation outlook are “tilted to the downside” in 2021.

“Even so, the rise is unlikely to threaten the BSP’s monetary policy stance,” ANZ Research said.

“Economic growth is still the key concern of policymakers, despite the breathing room provided by stronger momentum recently,” it added.

The BSP earlier this month left its benchmark rate unchanged at 4% — a decision described as a “prudent pause” to let the previous cuts to the policy rate and reserve requirement work their way through the economy.

But BSP Governor Benjamin Diokno said monetary authorities could still slash key interest rates anew in their eighth and last policy review for the year on December 12.