Philippines' July inflation 4.9 pct, highest in nearly 3 yrs

Posted at 08/05/14 9:44 AM

MANILA, Philippines - Philippine inflation in July picked up more than expected for a second consecutive month to 4.9 percent, the statistics agency said.

The July inflation is also the highest in the range of the BSP's forecast.

Analysts say this puts more pressure on the Bangko Sentral to further raise interest rates which could slow economic growth.

On Thursday, the Bangko Sentral ng Pilipinas on Thursday raised its main overnight borrowing rate by 25 basis points to 3.75 percent for the first time in three years, a move aimed at taming price pressures as they threatened to top next year's inflation target of 2 to 4 percent.

The rate increase was the central bank's fourth and most aggressive move against inflation in as many meetings, and analysts expect further tightening ahead to anchor inflation expectations.

The central bank expects average 2014 inflation of 4.33 percent against 4.4 percent previously, and 3.72 percent in 2015 versus a previous forecast of 3.65 percent.

Annual money supply growth slowed to an 11-month low of 28.4 percent in May as earlier policy tweaks, via two consecutive 1 percentage point increases in banks' required reserves, take root.

The Philippine economy grew 5.7 percent in the first quarter, way below the government's 6.5 to 7.5 percent target for the year, hurt by the impact of last year's super typhoon. - With ANC and Reuters