The November outcome was also the ninth consecutive month inflation has fallen.
The figures reflected a slowdown in price increases of all commodity groups except for the housing and repairs sector, the NSO said.
The November figures brought inflation for the 11 months of the year to 6.4 percent, compared with the government’s 2006 target of 6.9 percent.
"This confirms the BSP outlook for continued deceleration in price increases," said BSP Governor Amando M. Tetangco Jr. "It also bolsters our outlook that the inflation level in 2007 would be within our target."
According to Tetangco, the decline in oil prices have begun to trickle down to the prices of basic commodities and the trend was expected to continue throughout next year.
With the continued appreciation of the peso, Tetangco said the BSP expected to be able to meet the target inflation rate for 2007 pegged at three to four percent.
Central bank officials and economists had earlier said they expected the November inflation rate would reflect the impact of declining oil prices and a stronger peso.
Core inflation, which excludes more volatile food and energy items, fell to 4.7 percent in November from 5.1 percent in October.
Although the downtrend may continue going into next year, economists said inflation may pick up in December due to brisk dollar remittances ahead of the Christmas holidays from the millions of Filipinos working abroad.
"While liquidity has been a concern as it could very well stoke inflation, the key factors keeping inflation at bay have been the stronger peso and lower oil and rice prices," DBS Bank said in market note.
"However, inflationary pressure may build up as the spike in year-end remittance inflows is translated into consumption," the note added.
Economists predicted the central bank will now trim its key interest rates at its next policy meeting on Dec. 14.
"The benign inflation in November certainly gives the central bank more motivation to go for a full rate cut of 50 basis points," said Irvin Seah, an economist at DBS Bank in Singapore.
"We won’t be surprised if it goes for a full cut," Seah said.
Prakash Sakpal, an economist with ING Financial Markets, said the central bank is likely to go for a moderate cut of only 25 basis points.
"The central bank since last month has already started easing monetary policy... and while the November inflation rate shows that inflationary pressures are subsiding, it is not expected to act aggressively as it still wants to rein in inflation," he added.
The NSO said the annual inflation rate in the National Capital Region (NCR) went down to 5.4 percent in November from 5.9 percent in October.
The NSO reported that this was due to the slower annual price gains in food, beverages and tobacco (FBT), fuel, light and water (FLW) and services items.
Inflation rate in Areas Outside the National Capital Region (AONCR), on the other hand, was recorded at 4.3 percent in November which was also slower than the 5.1-percent growth in October.
The local money supply grew by 16.1 percent in October, bolstering fears of monetary officials that strong dollar inflows could fuel inflation pressures.
Despite the slowdown in November prices, however, the BSP is still faced with the rapid increase in domestic money supply that officials fear could impact inflation over the next few months. – with Aisa Osorio and AFP