Philippine inflation at near 2-year low but rates likely to stay elevated
By Neil Jerome Morales and Mikhail Flores
MANILA (Reuters) — Philippine inflation slowed to its weakest in nearly two years in December but full-year readings remained outside the central bank's target zone, diminishing chances of near-term rate cuts.
The central bank did not waver on Friday from its stance in early December that policy settings would stay «sufficiently tight», underscoring concerns about inflation despite a slowdown in the pace of price gains.
The consumer price index in December rose 3.9% from a year earlier compared with 4.1% in November, the statistics agency said on Friday, the slowest since February 2022 and the third straight month that inflation has eased.
That brought the 2023 average inflation rate to 6.0%, still way outside the central bank's 2%-4% target.
«The Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident,» the Bangko Sentral ng Pilipinas (BSP) said in a statement following the data.
«The BSP will continue to monitor inflation expectations and second-round effects and take appropriate action as needed to bring inflation back to the target,» it added.
Economists in a Reuters poll had forecast annual inflation of 4.0% in December, within the central bank's 3.6% to 4.4% projection for the month.
Core inflation, which strips out volatile food and energy prices, was at 4.4% in December versus 4.7% in the previous month.
Among the main contributors to slower inflation was a decline in food inflation to 5.5% in December from 5.8% in November, the statistics agency said.
The central bank kept its benchmark interest rate steady at 6.5% for a second straight meeting in December, after a series of rate
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