BSP: Consumer price hikes likely hit fresh peak in May

MANILA, Philippines — The overall increase in prices of key consumer items likely hit a fresh high in May lifted by rising prices of oil and rice, the Bangko Sentral ng Pilipinas said.

In a statement, the BSP’s Department of Economic Research said they expect monthly inflation to settle within the 4.6-5.4 percent range in May using 2012 as base year.

If realized, the BSP’s forecast for the month would exceed April’s 4.5 percent, which was the fastest pace in more than five years. Year-to-date, inflation already averaged 4.1 percent, above the BSP’s 2-4 percent target range.

“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 central bank unit said.

“These could be 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,” it added.

For the first time in nearly four years, the BSP earlier this month lifted key rates by 25 basis points to rein in inflation, adding that monetary authorities are ready to undertake further policy action to maintain price stability.

The Tax Reform for Acceleration and Inclusion Act—which lowers personal income taxes while raising excise levies on fuel and “sin” products, among others—has been partly blamed for the soaring prices of widely used goods and services in recent months.

Meanwhile, the central bank now expects inflation to remain elevated in the coming months and peak “towards the end of 2018,” citing a possible jump in world crude prices and second-round effects of the tax reform law.

“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-DER said.

The government will release the May inflation data on June 5.