Bloomberg News

Philippine Inflation Quickens on Utility, Transport Costs

October 04, 2011

(Updates with comment from central bank governor in fifth paragraph.)

Oct. 5 (Bloomberg) -- Philippine inflation accelerated in September after transport and utility costs rose, complicating the central bank’s job as it juggles the need to contain price pressures with protecting growth.

Consumer prices increased 4.8 percent from a year earlier, after a 4.7 percent gain in August, the National Statistics Office said in Manila today using 2006 as a base year. The median estimate in a Bloomberg News survey of 10 economists was for a 4.9 percent rate. Inflation was 4.6 percent using the 2000 series.

“Supply disruptions from the recent typhoons and a weaker peso may have pushed inflation higher,” Radhika Rao, an economist at Forecast Pte in Singapore, said before the report. “But it is unlikely that the central bank will change their rhetoric given the weak global sentiment. The regional policy direction is for keeping rates unchanged.”

Europe’s debt crisis and a struggling U.S. recovery are clouding the outlook for Asia’s exports and prompted policy makers from Malaysia to Taiwan to leave interest rates unchanged last month even as inflation remains elevated. Bangko Sentral ng Pilipinas will likely keep its benchmark rate steady for the rest of 2011, Governor Amando Tetangco said in September.

‘Risk Appetite’

“We continue to be mindful of global developments, particularly growth prospects in advanced economies which could affect local and regional aggregate demand,” Tetangco said in a mobile-phone text message today. “We are also watchful of policy developments to resolve the European debt crisis as these could impact on risk appetite and therefore capital flows into emerging markets.”

The central bank held the rate it pays lenders for overnight deposits at 4.5 percent last month after increasing it twice earlier this year. The next decision is due Oct. 20.

Two typhoons struck the Philippines last month, killing more than 50 people and damaging crops and roads.

Benchmark five-year bond yields due September 2016 fell today after the report, according to Tradition Financial Services. The peso gained, snapping four days of losses, according to Tullett Prebon Plc. The local currency fell more than 3 percent in September, its worst monthly loss since May 2010.

Philippine transport costs rose 7.1 percent last month from a year earlier. Fuel, electricity and water prices climbed 5.7 percent, today’s report showed.

--With assistance from Cecilia Yap and Clarissa Batino in Manila, Sarina Yoo in Seoul and Michael Munoz in Hong Kong. Editors: Shamim Adam, Stephanie Phang

To contact the reporters on this story: Max Estayo in Manila at mestayo@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net.

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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