(Adds further details, comment from central bank governor, analyst estimates)
Headline inflation in October further dropped to a year-on-year rate of 4.3 percent from 4.4 percent in September, though advancing from the 2.9 percent recorded a year earlier, the latest data from the Philippine Statistics Authority (PSA) showed on Wednesday.
The PSA said inflation slowed as result of the lower annual increments in the indices of food and non-alcoholic beverages; clothing and footwear; and restaurant and miscellaneous goods and services.
The central bank said the inflation turnout in October came in within its forecast of 3.7 percent to 4.6 percent for the month.
Private analysts polled by The Manila Times had projected headline inflation in October at between 3.9 percent and 4.3 percent due to continued declines in food and petroleum prices during the period.
Security Bank Corp.’s inflation estimate was spot on at 4.3 percent, saying it expected commodity prices to have been capped as a growth slowdown in the eurozone and in China must have contributed to the waning of demand for oil. Rahul Bajoria, economist at UK-based investment bank Barclays, also forecast October inflation at 4.3 percent.
While headline inflation eased last month, prices in Metro Manila inched up to 3.6 percent from 3.5 percent in September and remained higher than the 1.1 percent posted in October 2013, the PSA data showed.
In areas outside Metro Manila, annual inflation decelerated to 4.5 percent from 4.7 percent but was up from 3.4 percent a year ago.
Excluding selected food and energy items, core inflation further decelerated to 3.2 percent in October from the 3.4 percent last month and 2.5 percent during the same period last year.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the latest inflation rate brings the year-to-date average at 4.3 percent, giving the monetary authority more confidence that the inflation target of 3 percent to 5 percent for 2014 is safe.
In a text message to reporters, Tetangco said the October inflation figure should help keep inflation expectations in check, especially in light of more favorable money supply conditions as the growth of the country’s money supply, or M3, has continued on its deceleration path.
“These developments give us room to pause. Nevertheless we will continue to monitor how our previous policy actions are filtering thru to the economy and see if there would be need for adjustments in our policy levers,” he added.