Philippines’ August inflation seen speeding up to near 9.5-year high

September 5, 2018 - 9:37 AM
Prices of different cuts of chicken are seen outside a meat shop in Paranaque, Metro Manila, Philippines August 7, 2018. (REUTERS/Erik De Castro)

Philippine annual inflation is expected to have quickened in August to the fastest pace in nearly 9-1/2 years, reflecting higher prices of key food items, including rice, and energy costs, a Reuters poll showed.

Ten economists surveyed by Reuters unanimously expect inflation to be faster last month than July’s 5.7 percent, already the highest since March 2009. The median forecast in the poll was for the consumer price index to show an increase of 5.9 percent from a year earlier.

It matches the central bank’s forecast for August and marks the sixth consecutive month that the rate exceeds the central bank’s 2-4 percent comfort range.

The acceleration could prompt the central bank to raise key interest rates for the fourth time this year when it reviews policy on Sept. 27, some economists said.

Others expect a pause following three rate hikes totalling 100 basis points in the last three months, but they said policymakers would likely maintain their hawkish rhetorics.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla last month said inflation was expected to peak either in August or September and reiterated it would return inside the 2 to 4 percent target range next year.

Economists at Nomura in Singapore, in a research note released on Monday, said the BSP would likely hike its policy rate by a further 50 basis points this year, bringing it to 4.50 percent.

But with inflation likely to moderate in the last quarter, the central bank could just leave interest rates steady for the rest of the year, said Chidu Narayanan, economist for Asia at Standard Chartered Bank in Singapore. -Reporting by Enrico dela Cruz; Editing by Gopakumar Warrier