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MANILA: Rising food prices in the Philippines pushed its June inflation rate to 11.4 per cent, the highest level in 14 years, the government said Friday.
The upturn exceeded the forecasts of both the central bank and many private analysts who had expected inflation to range from 10.4 to 11.2 per cent.
This was also the highest rate since May 1994 when the inflation rate hit 11.5 per cent, the National Statistics Office said in a statement.
Central bank governor Amando Tetangco signalled the monetary authority's plan to tighten monetary policy.
"Demand pressures will moderate as monetary policy is generally tightened," Tetangco told reporters.
The central bank began tightening its key interest rates last month, for the first time since 2005, after the May inflation figure spiked to 9.6 per cent.
The overnight borrowing rate rose to 5.25 per cent while the overnight lending rate was increased to 7.25 per cent, both by 25 basis points.
The government said Friday that the upsurge in inflation was due to "soaring prices of rice nationwide along with the upward adjustments of other food items such as flour and flour products, fruits and vegetables and meat in selected regions.
"Tuition fee hikes and the series of upward adjustments in petroleum products also contributed to the uptrend," the statement said.
The school season began last month.
The statistics office also revised the inflation rate in May to 9.5 per cent from 9.6 per cent.
Excluding selected food and energy items, core inflation rose to 6.6 per cent in May from 6.2 per cent in May, the office said.
The June figure brings inflation in the first half of the year to 7.6 per cent.
The central bank originally forecast inflation for the whole year at 3.0 to 5.0 per cent.
"We share the view that current oil and food prices are hardly sustainable, producing a global slowdown and widespread inflation in all countries," Tetangco said.
However, the spike is not sustainable and inflation should be "back to normal" by early next year.
Earlier this week, Tetangco said "inflation will reach double-digits beginning in June" and peak within the next three months, before settling at an average of 7.0-9.0 per cent.
The Philippines is one of the world's biggest rice importers and has been hit hard by a worldwide rise in prices.
- AFP/yb
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