ASEAN KEY DESTINATIONS
Philippine 2010 inflation on target
Philippine consumet prices ended the year within the central bank’s 2010 target, as inflation was unchanged in December despite costlier food and clothing during the holiday season.Data from National Statistics Office (NSO) showed that inflation last month stayed at 3 percent, the same as in November, and lower than the 4.3 percent in December 2009.
The NSO attributed the steady pricThe NSO attributed the steady prices in December to the slower increases in the fuel, light and water (FLW), services and miscellaneous items indices.
This was despite the continued upward movement of food items at a rate of two percent for three consecutive months.
Last month’s headline figure was within the Bangko Sentral ng Pilipinas (BSP) forecast of 2.5 percent to 3.4 percent.
The country’s full-year average price increase settled at 3.8 percent or within the BSP target of between 3.5 percent and 5.5 percent for 2010.
In 2009, inflation averaged a lower 3.2 percent.
Excluding selected food and energy items, core inflation eased to 3.4 percent in December from 3.5 percent in November, while the full-year average settled at 3.7 percent last year from 4.1 percent in 2009.
In a separate statement, the BSP said last month’s price figures give it “additional confidence that inflation will remain manageable within the policy horizon.”
“The inflation turnout in December supports our assessment of a manageable inflation outlook over the policy horizon, of course, barring adverse price surprises,” Gov. Amando Tetangco Jr. said in a text message to reporters.
In a statement also on Wednesday, Moody’s Investors’ Service said the BSP’s “continued ability . . . to anchor inflationary expectations under its formal inflation-targeting framework” has kept the rating firm’s outlook on the Philippines’ credit score stable.
On December 29, the policy-making Monetary Board decided to maintain the BSP’s key policy interest rates at 4 percent for the overnight borrowing or reverse repurchase (RRP) and 6 percent for the overnight lending or repurchase (RP).
Pundits expect inflation to remain modest in 2011, as expectations of a stronger peso and adequate food supply will temper increases in world crude oil prices and possible supply shocks.
They expect the BSP to initiate the tightening cycle this year by raising its policy rate by 50 to 75 basis points in the first half.
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