Philippine inflation seen easing to six-month low in December: Reuters poll

MANILA (Reuters) – Philippine inflation is expected to slowed to a six-month low in December on easing food and fuel prices, a Reuters poll showed, making it likely the central bank would leave policy rates unchanged this year.

The median forecast in a poll of 10 economists was for the consumer price index to have risen 5.6 percent in December from a year earlier, which would be within the central bank’s 5.2 to 6 percent projection for the month.

While the expected outcome is still outside the central bank’s 2-4 percent target for 2018 and this year, it would mark the second straight month that inflation has slowed and the first time since August that the print was below 6 percent.

The Philippine central bank left the rate on its overnight reverse repurchase facility on hold on Dec. 13 after five successive hikes, after inflation dropped to a four-month low of 6.0 percent in November.

With inflation expected to continue to slow, helped by easing food and fuel costs, and as the impact on higher taxes on some commodities fade, some economists believe the central bank’s rate tightening cycle has come to a close and it could even cut rates this year.

The central bank expects inflation to return to its target range this year, with the average seen at 3.18 percent from the expected 5.2 percent average in 2018.

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