MANILA – Philippine inflation rose 7.1 percent from a year earlier in January, the lowest level of growth in 10 months, as economic activity slowed amid the global financial crisis, the National Statistics Office said yesterday.

Prices grew by a slower pace than the 8.0 percent rate in December and extended a downtrend that started in September, NSO data show.

Food and fuel items made the most significant impact in its consumer price index basket.

Inflation rate for areas outside the National Capital Region also declined significantly from 9.6 percent in December 2008 to 8.3 percent in January this year, buoyed by decelerating prices of fuel, light and water.

The inflation rate in the NCR also went down from 4.5 percent to 4.3 percent as negative annual price adjustments were recorded for FLW and services groups.

Anticipating the decline, the central bank has cut its key interest rates by a total of one percentage point over the past two months to loosen credit and stimulate economic activity even as businesses cut more than 15,000 jobs amid depressed global demand for Filipino exports.

Bangko Sentral ng Pilipinas governor Armando Tetangco suggested that there was further room for maneuver on monetary policy.

"This confirms our expectation for continued slowdown in price increases and gives the (central bank) more room to support the economy," he told Dow Jones Newswires.*AFP

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