MANILA: Philippine annual inflation slowed for a sixth consecutive month in April, reinforcing views the central bank will loosen its grip on monetary policy to support economic growth.
Lower food and utility fuel prices brought last month's headline inflation to 3.0 percent, down from March's 3.3 percent and the lowest in 16 months, matching the median forecast in a Reuters poll.
Inflation is seen to slow further this year as the impact from new and higher taxes imposed last year on certain commodities fades and as the government lifts rice import caps. Food prices account for about 35 percent of the consumer price basket.
Core inflation, which strips out volatile food and fuel items, slowed to 3.4 percent from the previous month's 3.5 percent. Consumer prices in April rose 0.3 percent from the previous month.
The Philippines' broader stock market index rose as much as 0.34 percent in the morning trades following the announcement of inflation data, while the Philippine peso was trading flat.
Cooling inflation is expected to have boosted domestic demand in the first quarter but it was probably not enough to counter the dampening effects on growth from a delay in the approval of the national budget and weak exports.
With inflation slowing and growth forecast to have slowed in the March quarter, a majority of economists in a Reuters poll believed conditions were ripe for either a cut in the benchmark interest rate or bank's required reserves, or both.
First-quarter gross domestic product figures would be released on May 9, the same day the Bangko Sentral ng Pilipinas (BSP) bank holds a policy meeting.
BSP Governor Benjamin Diokno said last week cuts in both the main policy rate and the reserve requirement ratio (RRR) for banks were "inevitable" this year as inflation had ebbed.
The Philippines remains one of Asia's fastest-growing economies, but policymakers had to grapple with soaring inflation last year that pushed the central bank to raise its benchmark interest rate by a total 175 basis points to 4.75 percent.
Eight of 12 economists in the poll predicted the central bank would deliver a quarter-point reduction in its benchmark interest rate on Thursday.
Four of the eight further said the policy rate cut would also be accompanied by a 100 basis point reduction in the RRR, or the amount of cash that banks must hold as reserves, to ease liquidity conditions.
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