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Philippine annual inflation rose more than expected in December to an eight-month high on fuel and food costs.
Consumer price annual inflation accelerated to 4.4% in December, a report released by the National Statistics Office showed Tuesday. Economists had expected the inflation rate to rise to 4.2% in December from 2.8% in November. A year ago, the inflation rate was 8%. From the previous month, consumer prices were up 0.6%, the same as in November.
The report showed that annual headline inflation for 2009 came in at 3.2%, down from the 9.3% average rate seen in 2008. The annual average inflation for food alone slowed at 6% in 2009 from 13.6% in last year.
Core inflation, that strips out selected food and energy prices, picked up to 3.2% in December from 2.7% in November. The annual average core inflation rate was 4.1% in 2009, lower than the 6.2% in 2008.
Cost of fuel, light and water rose 7.6% in December from the corresponding period of last year following a 1.1% fall in November. The food, beverages and tobacco index moved up 5.2% versus November's 4.8% growth. Services charges climbed at a pace of 3.5%, up from the previous month's 0.2%. At the same time, the annual increase in housing and repairs stayed at 2.1% for the fourth month in a row and cost of clothing eased slightly to 2% from 2.1%.
The central bank is confident of meeting its inflation targets this year and next year, Amando Tetangco, central bank governor said. The Bangko Sentral ng Pilipinas or BSP expects inflation to range between 3.5% and 5.5% this year and 3% and 5% in 2011.
In a note, ING chief Asian economist, Tim Condon said well-anchored inflation expectations and ample slack in the economy are behind the consensus forecast that the central bank can wait for the Fed or even later to start hiking.
Evaluating the the current monetary policy settings as appropriate, the BSP had kept its key interest rates unchanged for a fourth straight rate-setting session in December. The overnight borrowing rate stands at 4% and overnight lending at 6%.
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