* Jan CPI at 2.9% y/y vs 2.5% in December
* Jan CPI highest in eight months
* C.bank still expected to cut rates on Thursday
By Karen Lema and Neil Jerome Morales
MANILA, Feb 5 (Reuters) - Philippine January inflation
picked up more than expected to an eight-month peak, but the
outcome is still within the central bank's comfort range and
supports views it will likely cut interest rates when it meets
on Thursday.
The consumer price index (CPI) in January rose 2.9% from a
year earlier, the statistics agency said on Wednesday, the
highest since May 2019, due to increases in the cost of food,
clothing, transport and utilities.
A Reuters poll had forecast the CPI in January would rise
2.8% from a year earlier, within the central bank's 2.5%-3.3%
forecast range for the month, and more than the previous month's
2.5% increase.
"This is consistent with the BSP's prevailing assessment
that inflation is expected to gradually approach the midpoint of
the target range in 2020 and 2021," Bangko Sentral ng Pilipinas
Governor Benjamin Diokno said in a tweet.
The annual core inflation rate was 3.3% in January compared
with December's 3.1%.
The data was released a day before the central bank meets,
where it is widely expected to cut its policy rate by 25 basis
points to 3.75% to buttress the economy against the negative
impact of the spreading virus outbreak.
"Inflation pop in January (was) induced by transitory
factors and we expect the central bank to carry out its rate cut
on Thursday despite the slightly higher inflation print," ING
Economist Nicholas Mapa said.
The central bank has a 2%-4% inflation target for this year.
It kept rates on hold at its meetings in November and
December as the outlook improved on the back of higher
government spending and strong domestic demand.
Governor Diokno said last week the central bank was still
eyeing at least a 50 basis point cut in policy rates this year
to further unwind the total 175 basis points of rate hikes in
2018 to control red-hot inflation. The government has set a 6.5%-7.5% growth target for the
year, but disruption caused by the coronavirus outbreak which
began in China and is spreading to other countries poses risks
to Manila's growth outlook.
(Editing by Jacqueline Wong)