Country Report Philippines April 2011

Outlook for 2011-15: Inflation

A gradual recovery in domestic demand, a poor domestic rice harvest and higher global oil prices contributed to an acceleration in inflation in 2010. Consumer prices rose at an annual average rate of 3.8% in that year. Inflation will accelerate again in 2011, to 5.3% on average, in line with higher global prices for oil and non-oil commodities, notably food. Annual inflation will slow to 4.6% in 2012 as global commodity prices fall again, and it will then average 4.7% in 2013-15. Wage pressures are likely to increase in line with healthy economic growth, but relatively high unemployment will deter excessive wage demands.

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