MANILA: Philippine annual inflation probably eased in October as a strong peso dampened imported food and crude oil prices, lessening the chances of further interest rate cuts by the central bank in the near term.
The consumer price index may have risen by 3.5 percent in October from a year earlier, a Reuters poll of 12 economists showed, slightly slower than a 3.6 percent climb in September.
Core inflation, which strips out some of the more volatile components including food, likely was steady at 3.8 percent from September, the same poll showed.
"Inflation is expected to remain contained given the peso's strength against a backdrop of slightly higher service sector costs," said Prakriti Sofat, regional economist at Barclays Capital.
The central bank cut its key policy rate for a fourth time this year on Oct. 25 to a record low of 3.5 percent to help manage surging capital inflows.
It expects annual headline inflation to be at 2.9 to 3.8 percent in October.
The low end of the central bank's forecast would mark the slowest pace in four months.
The central bank now sees inflation this year averaging 3.3 percent against a previous estimate of 3.4 percent and the annual target of 3 to 5 percent. Inflation in the first nine months averaged 3.2 percent.
Economists said the central bank could maintain an accommodative monetary policy moving into 2013, but did not see another rate cut soon.
"We do not expect any further cuts this year and into next, as the central bank juggles the need to contain speculative inflows against stoking pipeline inflationary risks on the back of a strong domestic sector," said Radhika Rao, economist at Forecast Pte in Singapore.
On Tuesday, Governor Amando Tetangco said the central bank could no longer rely on policy rate adjustments alone and would look at other policy tools to manage hot money coming in.
His comments suggested a pause in policy easing while the central bank continues to deal with capital inflows that have helped push the peso up more than 6 percent this year, making it the best performing emerging Asian currency.
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