Philippines inflation unchanged in October; leaves little scope for the central bank to adjust monetary stance

Official data released Friday showed that inflation in the Philippines was unchanged at 2.3 percent y/y but that remains the strongest rate since March of 2015. An uptick in food prices in the aftermath of two powerful typhoons was the main driver. Food prices for the month rose 3.4 percent, according to the Philippine Statistics Authority.

Inflation for the month was within the 1.9 percent to 2.7 percent expectation of the Bangko Sentral ng Pilipinas (BSP). The central bank Governor Amando Tetangco said inflation was manageable over the policy horizon. The headline inflation figure will slowly rise to within target in 2017 and 2018, he added.

"We see little risk of average inflation breaching the upper bound of Bangko Sentral ng Pilipinas (BSP)’s target in 2017. Our 2016 and 2017 forecasts indicate average inflation of 1.6% y/y and 2.9% respectively," said ANZ in a report.

The central bank, which kept key rates steady at its last meeting on Sept. 22, meets on Nov. 10 to review monetary policy setting. With a robust domestic growth outlook and expectations of manageable inflation, the central bank is likely to maintain its policy settings at the upcoming meeting.

"We see no need for the central bank to provide further support to the robust domestic economy," adds ANZ.