Philippines' 4-year high inflation boosts chances of more rate hikes

ING Bank economist Nicholas Mapa expects the central bank to lift its key policy rate by 50bps at each of its two remaining meetings this year, to tame inflation

Photo: Reuters
Photo: Reuters

By Reuters

Published: Wed 5 Oct 2022, 12:58 PM

Philippine annual inflation quickened to 6.9 per cent in September — hitting its fastest pace in four years — firming up expectations that the central bank will hike rates further before the year ends.

The September inflation rate, which was above the 6.7 per cent forecast in a Reuters poll, was driven mainly by high food and utility prices, and brought the average rate in the nine months to September to 5.1 per cent — well outside the central bank's 2 per cent to 4 per cent target, the statistics agency said on Wednesday.

The faster-than-expected inflation rate reinforced expectations the Bangko Sentral ng Pilipinas (BSP), which has so far raised rates by a total of 225 basis points this year, would deliver more rate hikes at its November and December meetings.

"The BSP is prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term, consistent with its primary objective to promote price stability," the BSP said in a statement.

ING Bank economist Nicholas Mapa said in a statement that he expected the central bank to lift its key policy rate —currently at 4.25 per cent — by 50 basis points at each of its two remaining meetings this year, to tame inflation.

Mapa declared that food prices, however, would stay high due to crop damage from a recent typhoon, consistent with the expectations of the statistics agency which said on Wednesday, inflation could further quicken in October.

Core inflation, which strips out volatile food and fuel items, eased to 4.5 per cent in September from 4.6 per cent in August, the statistics agency said.


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