(Bloomberg) -- Philippine inflation ticked higher in November but was within the central bank’s expectations, giving the monetary authority room to cut interest rates further.
Consumer prices rose 2.5% year-on-year last month, according to the Philippine Statistics Authority on Thursday, matching the median estimate of economists in a Bloomberg survey. While inflation accelerated for the second straight month, it was within the central bank’s 2.2% to 3% forecast.
But core inflation, which strips out volatile food and energy prices, came in at 2.5%, quickening for the first time since March 2023.
The latest outturn is consistent 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,” Bangko Sentral ng Pilipinas said in a statement. This shows easing supply pressures for key food items, particularly rice, the BSP said, adding it will consider the data in its Dec. 19 rate-setting meeting.
“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 gains in overall food prices drove inflation in November even as rice inflation eased to 5.1% from 9.6% in the prior month, data showed. Price gains in rice are expected to ease further, National Statistician Claire Dennis Mapa said in a briefing.
Last month’s number, which was within the central bank’s 2% to 4% target for the year, supports further monetary easing. The central bank has reduced its benchmark key rate by a total 50 basis points since August.
Central bank Governor Eli Remolona last month said both a rate cut and a pause will be considered on Dec. 19. He said that while the central bank was still on an easing cycle, signs of price pressures could prod policymakers to stand pat.
Economic growth that slowed more than expected last quarter could sway policymakers into sustaining the easing cycle, while the peso’s weakness against the strong US dollar may give them reason to hold its key interest rate steady.
What Bloomberg Economics Says...
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 Dec. 19 to ensure inflation expectations remain firmly anchored.
—Tamara Mast Henderson, Asean economist
For the full note, click here
The balance of risks to the inflation outlook for 2025 and 2026 has shifted toward the upside, the BSP said, citing potentially higher power rates and wages.
Philippine markets were largely steady after the data, with the main stock index and the peso little changed in morning trading.
--With assistance from Andreo Calonzo.
(Adds central bank comment and details throughout.)
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