Friday, 6 February 2009

Philippine inflation eases to 7.1% in Jan.; Central Bank hints at further rate cuts

The Manila Bulletin
http://www.mb.com.ph/BSNS20090206147431.html

The country’s inflation, as measured by the consumer price index (CPI), decelerated to its slowest pace in 10 months in January, providing the central bank leeway to further ease monetary policy to bolster economic activity amid the global downturn.

The National Statistics Office NSO) said yesterday that the inflation rate rose 7.1 percent on year, slower than December’s 8.0 percent due to a decline in fuel prices and stable commodity prices. It marks the fifth consecutive month that inflation has moderated after rising to a 17-year high of 12.5 percent in August.

The inflation rate in January last year was 4.9 percent.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. hinted of possible further rates cut to provide stimulus to the economy.

Tetangco said the slowing inflation rates, which fell to 7.1 percent for January, was within the BSP’s expectation, allowing monetary officials more leeway to adjust rates lower.

"(Our) expectation for a continued slowdown in price increases gives the BSP more room to support the economy and ensure that there is sufficient liquidity for the efficient working of the financial markets," Tetangco, who is in Malaysia, said in a text message to reporters yesterday.

The BSP in its last policy rate meeting reduced rates by 50 basis points and readjusted inflation forecasts lower to 3.9 percent for 2009 and 4.7 percent for 2010. "We will continue to closely monitor developments so that our policy settings remain responsive to evolving scenarios," said

The NSP said the annual inflation rate in the National Capital Region (NCR) likewise further eased to 4.3 percent in January from 4.5 percent in December due to the negative annual price adjustments in the fuel, light and water and services index and the slowing down in the annual growth rates of clothing and miscellaneous items index.

Annual price movements in areas outside the National Capital Region (AONCR) also decelerated as its annual inflation rate further slid to 8.3 percent in January from 9.6 percent in December.

NSO said this was attributed to the negative annual growth rate posted in the fuel, light and water index together with the downward annual price increases in all the other commodity groups.

Excluding selected food and energy items, core inflation further slipped to 6.9 percent in January from 7.3 percent in December.

The annual inflation rate in NCR further slowed down to 4.3 percent in January from 4.5 percent in December.

NSO noted that the annual inflation rate in areas outside Metro Manila also improved to 8.3 percent in January from 9.6 percent in December due to the continued deceleration in the annual growth rates registered in all the regions except for Bicol.

The biggest slowdown of 2.4 percentage points was seen in Zamboanga Peninsula (9.0% from 11.4%).The lowest annual inflation in January at 6.1 percent was still noted in CALABARZON while Eastern Visayas still posted the highest inflation rate at 12.7 percent. (EHL)

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