RP inflation hits 6 percent

RP inflation hits 6 percent

MANILA: Consumer prices in the Philippines shot up 8.6 percent in December, bringing the 2004 average inflation rate to six 6.0 topping official forecasts and raising the possibility of higher interest rates, the government said on Wednesday.

The 2004 figure, using 2000 as a base year, exceeded government forecasts, an official of the Central Bank of the Philippines said on condition of anonymity.

The source would not disclose what those forecasts were.

Under the old system, using 1994 as the base year, inflation in December rose to 7.9 percent, bringing the annual average inflation rate 5.5 percent, the National Statistics Office said.

The government had targeted an inflation rate for 2004 at 4.0- 5.0 five percent with December at 7.6-8.1 percent based on 1994 prices.

The central bank official blamed the higher-than-expected inflation rate in 2004 to "supply factors, particularly the unprecedented increase in oil prices" as well as sharp increases in food costs following a series of storms late last year.-- AFP