November inflation seen at 2.9%

The country’s inflation is likely to inched higher in November, pushed up by weaker farm output and fuel price hikes, but economists said the rise was not worrisome.

A Reuters poll of 10 economists produced an average forecast that consumer prices rose 2.91 percent last month compared with November 2001. The inflation rate was 2.7 percent in October.

The estimates ranged from 2.6 to 3.2 percent, depending on how analysts viewed the impact of food prices.

The government is due to release the data on Thursday.

The Bangko Sentral ng Pilipinas has said it expects the inflation rate for November to be three to 3.1 percent due to the effects of El Niño, a weather phenomenon marked by prolonged dry spells which has hurt agricultural output.

But Socio-Economic Planning Secretary Dante Canlas has said he sees inflation coming in at between 2.5 and 2.7 percent given relatively stable food prices.

"It’s more cost-push pressure brought about by oil price hikes and weaker agriculture," said CLSA Philippines research head Alex Pomento. "But nothing to worry about."

AB Capital economic analyst Jose Vistan said weaker farm output could have led to slightly tighter food supply, but economists agreed food prices were generally stable.

This would help temper the rise in inflation, which could have shot up sharply as the peso weakened and fuel prices rose on fears of a war in the Middle East, they said.

Beyond tensions over Iraq, the peso was hit by budget deficit woes that prompted Fitch Ratings and Standard & Poor’s to cut their outlooks for the Philippines to negative.

The currency, which hit a 16-month low of 53.86 to the US dollar last week, was trading around 53.53/57 on yesterday morning.