September Inflation Surprises On The Upside

Philippines September inflation surprised on the upside. M/M was +1.1%, versus 0.4% expected and 1.1% in August. This left y/y headline at 6.1% against a 5.3% expected and 5.3% prior. Note BSP had a forecast range estimate of 5.3-6.1%, so we were at the upper end of that.

• Core inflation was 5.9%, down slightly from the August 6.1% pace. This is still comfortably above the BSP's 2-4% target band.
• Looking at the detail, focus again was on food inflation, particularly rice. Rice inflation was nearly 18% y/y, which push overall food inflation to +9.7% y/y (from 8.1%y/y in August). This came despite the government placing a cap on rice prices.
• Elsewhere, there was a slight downtick in y/y momentum for some categories, but only housing/utilities, transport (which is rebounding), IT and education remain sub the top end of the BSPs 2-4% target band.
• Today's print will raise the risks around a further BSP interest rate hike. Recall, Governor Remolona recently stated an out of cycle policy move could be considered, ahead of the next policy meeting on November 16.