Inflation pickup seen for 4th straight month

Economists believe inflation may have picked up for a fourth straight month in May, possibly hitting the central bank's upper four percent target, due to unfavorable base effects and high electricity rates.

- KEISHA TA-ASAN

The Philippine Statistics Authority will release its May inflation data on June 5.

Sarah Tan, an economist from Moody's Analytics, said headline inflation in the Philippines could pick up to 3.9 percent in May from 3.8 percent in April. Still, this would be the sixth straight month that inflation stayed within the two to four first percent target range.

"Upward price pressures will come from higher electricity rates as retailers pass on higher costs from the Wholesale Electricity Spot Market amid a jump in electricity demand when temperatures spiked across the country in May," Tan said.

On the other hand, food inflation may have moderated last month as rice prices stabilized, she said.

The Bangko Sentral ng Pilipinas (BSP) will also likely keep rates unchanged at its next policy review on June 27, Tan said.

This was after the Monetary Board hiked the key interest rate by 450 basis points to 6.5 percent.

"It is unlikely that inflation will sharply exceed the BSP's upper target of four percent, and so we don't expect any hikes.

A cooling core inflation reading will also give BSP confidence to keep the policy rate steady," Tan said.