Philippines: Inflation continues to fall in October
November 5, 2010
In October, consumer prices dropped 0.18% over the previous month, following on a 0.24% decline registered in September. The monthly price drop mainly reflected a decline in fuel, light and water prices, which fell 3.00% over September. As a result of the price drop, annual inflation dropped from 3.5% in September to 2.8%, which was below market expectations of 3.3%. Meanwhile, annual core inflation rate, which excludes volatile items such as oil and food prices, decreased to 3.3% (September: 3.8%). Annual average inflation, which is the reference rate for Central Bank's policy making, rose a notch to 3.9% in October but remains below the inflation target rate of 4.5% set by the Bank for 2010. Owing to the benign inflation environment, the monetary board decided to maintain benchmark interest rates unchanged at 4.00% at its latest meeting held on 7 October. At the meeting, monetary authorities agreed to set the inflation target for 2011 at 4.0% with a 1.0 percentage point tolerance margin.