Inflation uptick may delay BSP rate cuts

The faster-than-expected rise in consumer prices in August could prompt the Bangko Sentral ng Pilipinas (BSP) to delay its next round of interest rate cuts until December, economists said.

- By KEISHA TA-ASAN

In a note, Citi said the rebound in August inflation was driven mainly by higher prices of vegetables and fish due to adverse weather, even as rice continued its disinflation trend. Core inflation also picked up to 2.7 percent from 2.3 percent, its highest level this year.

"While weather-related inflation should be temporary, overall year-on-year inflation has probably bottomed. We now expect inflation to rise to 1.9 percent in September and two percent in October before easing again," Citi said.

Inflation accelerated to 1.5 percent year-on-year in August from 0.9 percent in July, overshooting market expectations of 1.2 percent. Month-on-month, seasonally adjusted inflation accelerated to 0.5 percent from zero growth in the previous month.