Philippines: Inflation finishes the year below Central Bank target
January 5, 2011
In December, consumer prices added 0.54% over the previous month, following on a 0.84% increase registered in November. The monthly price increase mainly reflected a rise in fuel, light and water prices, which rose 1.98% over November after also increasing the previous month (+4.98%). Despite the pronounced price rise, annual headline inflation remained unchanged at 3.0% in December, which was exactly in line with market expectations. Meanwhile, the annual core inflation rate, which excludes volatile items such as oil and food prices, inched down from 3.5% in November to 3.4% in December. Annual average inflation, which is the reference rate used by the Central Bank, fell slightly from 3.9% in November to 3.8% in December, remaining below the inflation target rate of 4.5% (1% tolerance margin) set by the Bank for 2010. The next monetary policy meeting is to be held on 28 January and, owing to the benign inflation environment, the Central Bank is expected to leave benchmark interest rates unchanged at the current record low of 4.00%.