, Philippines

Philippines' looming 3% inflation unlikely to persist in 2013

That's because it is expected to edge up higher.

According to DBS, November inflation data is on tap on Wednesday and a muted reading of 3.0% YoY is expected.

Here's more from DBS:

Part of this can be attributed to base effects, but a strong peso and stable food prices have also helped to keep a lid on headline inflation.

However, this situation is unlikely to be sustained going into 2013 and we expect inflation to trend up in 1H and average 4.1% in 2013, compared to 3.3% in 2012.

The economic growth momentum has been very strong over the last three quarters, with the country registering the fastest growth (7.1% YoY) for 3Q in Southeast Asia.

Domestic demand, aided by low interest rates, has been more than sufficient to offset the drag posed on the external front. Government consumption has also ratcheted up (and will rise in 1H13 as the country head into elections in mid-2013).

Accordingly, demand-pull inflation is likely to materialize in the medium term. As such, further monetary easing appears unlikely.

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