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Philippines inflation in biggest rise since April 2010 Philippines raises rates as prices hit one year high
(about 21 hours later)
Consumer prices rose more than expected in the Philippines, bringing inflation to its highest level in a year. The Philippines central bank has raised the cost of borrowing after consumer prices rose to a one year high.
The consumer price index rose by 4.5% in April from a year earlier, said the National Statistics Office. It was the highest gain since April 2010. The benchmark overnight borrowing rate was increased by 0.25%, bringing it to 4.5% - the highest in two years.
Many analysts predict the central bank will now raise interest rates later on Thursday. Philippines central bank governor, Amando Tetangco, signalled that this could be the start of further policy tightening.
Central banks in Asia have been trying to rein in rising prices without hurting economic growth. Earlier, the consumer price index rose by 4.5% in April from a year earlier, said the National Statistics Office.
The annual inflation in the Philippines in March was 4.3%. "The Monetary Board remains prepared to take appropriate actions necessary to ensure the achievement of the BSP's [central bank Bangko Sentral ng Pilipinas] price stability objective," said Mr Tetangco after the rate decision.
"Inflation resumed its acceleration in April," said Sherman Chan from HSBC. The Philippines previously raised the cost of borrowing in March this year, becoming the last major Asian country to do so after the global economy emerged from the financial crisis.
Central banks in Asia have generally been trying to rein in rising prices without hurting economic growth.
Price concerns
"Inflation resumed its acceleration in April," said Sherman Chan from HSBC, referring to the 4.5% figure.
"This is hardly a surprise, given the strong inflationary pressures coming from food and oil recently.""This is hardly a surprise, given the strong inflationary pressures coming from food and oil recently."
The central bank is meeting later to review its policy. These factors have been affecting prices in other Asian countries as well leading to interest rate hikes in recent months.
"The report today clearly suggests that inflationary pressures remain, and strengthens the case for an expected 25 basis points hike by BSP [central bank Bangko Sentral ng Pilipinas]," said Vincent Tsui from Standard Chartered Bank in Hong Kong. Thailand increased the cost of borrowing this month for the sixth time since July 2010.
While other Asian countries have raised interest rates in succession to try and control inflation as the global economy emerged from the financial crisis, the Philippines has only done so once, in March this year.
By contrast, Thailand increased the cost of borrowing this month for the sixth time since July 2010.
And India has raised rates nine times in 15 months.And India has raised rates nine times in 15 months.