THE growth of consumer prices in May could have skyrocketed to above 5 percent, the Bangko Sentral ng Pilipinas (BSP) said.
In its monthly forecast statement on inflation, the country’s central monetary authority admitted that May’s inflation rate likely breached anew their annual average target range.
The gravity of its derailment from the 2 percent-to-4 percent target range, however, hit a new high as the Central Bank said inflation could have hit anywhere between 4.6 percent and 5.4 percent in May.
This is a big leap from last year, coming from 2017’s 2.9 percent inflation rate in May. It is also a certain acceleration from the 4.5 percent posted in April this year.
The BSP Department of Economic Research explained that both local and international developments contributed to the potentially sharp rise in inflation for the month.
“Higher domestic petroleum prices amid geopolitical tensions in the Middle East, as well as the sustained increase in rice prices, present upward price pressures for the month,” the BSP said in a statement released on Thursday.
Inflation could have gone higher, the BSP added, if not partly offset by lower electricity rates in Meralco-serviced areas, along with lower prices of selected fruits and fish items as supply conditions normalized for the month.
The BSP forecasts inflation to average at 4.6 percent this year before normalizing back to within-target levels for 2019 at 3.4 percent.
In its last monetary-policy meeting, the BSP hiked its main policy rate by 25 basis points to temper inflation pressures in the coming months. This is the first hike coming from the BSP since 2014.
Whether or not the BSP will decree another rate hike before the year ends, analysts are still looking for cues from the BSP.
“BSP’s move should calm investors in the equity and bond side, signaling to them that inflation will likely come down now that the central bank is in a tightening bias,” ING Bank Manila senior economist Joey Cuyegkeng earlier said.
“However, with another rate hike less likely in the very near term and with weak external payments fundamentals, the peso would be volatile with a weakening bias,” he added.
The BSP monetary board will reconvene for their next monetary-policy decision making on June 21. In its statement on Thursday, however, the BSP vowed to remain vigilant against further risks to price stability in the country.
“Going forward, the BSP will remain watchful of evolving price trends and ensure that the monetary-policy stance remains appropriate to maintain price stability that is conducive to a balanced and sustainable economic growth,” the BSP said.
The Philippine Statistics Authority is expected to release the country’s May inflation numbers within June’s first week.