MANILA -- Inflation in the Philippines reached a fresh nine-year high in August, hitting a level that could pressure the country's central bank to further tighten monetary policy and hurt growth prospects for the rest of the year.
Inflation last month reached 6.4%, breaching the 6% level for the first time since March 2009. The uptick exceeded market expectations and the estimate of Bangko Sentral ng Pilipinas. Investors and the central bank had forecast 5.9% price growth.
The Philippine Statistics Authority said inflation was driven by surging prices for food and nonalcoholic beverages. The inflation rate for this subcategory was 8.5%.
Housing and utility costs rose 5.5% on the year.
BSP Gov. Nestor Espenilla on Wednesday did not rule out the possibility of another round of tightening at its next policy meeting, on Sept. 27. He said the BSP will also consider external developments and whether the U.S. Federal Reserve exerts "undue pressure" on the peso.
"Under the circumstances," Espenilla said, "we will weigh the need for further monetary policy action. Appropriate recommendations will be presented ... at its next policy meeting.
"It is most critical at this point to restore inflation back to the target range [as soon as possible] and securely anchor inflationary expectations."
Espenilla said much of the inflationary pressure stems from food supply shocks, particularly in the rice market, and from elevated oil prices. These developments, he said, are best addressed by nonmonetary measures.
Inflation has averaged 4.8% in the first eight months, above the central bank's target of 2-4%. The BSP said price increases will peak in the third quarter and are expected to then ease, falling within the central bank's target by 2019.
The BSP has raised its policy rate by 100 basis points since May, after holding steady for nearly four years. Last month, the bank lifted its benchmark rate by 50 basis points, to 4%, its most aggressive monetary action in over a decade.
Inflation has darkened the Philippine economy, which grew 6% in the second quarter, the slowest in three years. Household spending, the economy's key driver, has slowed for two quarters in a row as rising costs and President Rodrigo Duterte's tax increase discouraged spending.
A sliding peso has also pushed up the prices of imported goods, adding inflationary pressure. The local currency has fallen more than 7% against the dollar since the start of the year.
On Tuesday, the peso sunk to a fresh 12-year low against the greenback. Although this makes the remittances sent home by the millions of Filipinos working abroad, Emilio Neri, lead economist at Bank of the Philippine Islands, said inflation is negating this benefit.