By Neil Jerome Morales
MANILA (Reuters) – Philippine annual inflation quickened to 6.9% in September, hitting its fastest pace in four years, firming up expectations the central bank will hike rates further before the year ends.
The September inflation rate, which was above the 6.7% forecast in a Reuters poll, was driven mainly by high food and utility prices and brought the average rate in the nine months to September to 5.1%, the statistics agency said on Wednesday, well outside the central bank’s 2% to 4% target.
The faster-than-expected inflation rate reinforced expectations the Bangko Sentral ng Pilipinas (BSP), which has so far raised rates by a total of 225 basis points this year, would deliver more rate hikes at its November and December meetings.
“The BSP is prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term, consistent with its primary objective to promote price stability,” the BSP said in a statement.
ING Bank economist Nicholas Mapa said in a statement he expects the central bank to lift its key policy rate, currently at 4.25%, by 50 basis points at each of its two remaining meetings this year in to tame inflation.
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Mapa said food prices would stay high due to crop damage from a recent typhoon, consistent with the expectations of the statistics agency which said on Wednesday, inflation could further quicken in October.
Core inflation, which strips out volatile food and fuel items, eased to 4.5% in September from 4.6% in August, the statistics agency said.
(Additional reporting by Enrico Dela Cruz; Writing by Karen Lema; Editing by Edmund Klamann and Kanupriya Kapoor)