Annual Philippine inflation accelerated at a faster pace in May, hitting a nine-year high of 9.6 percent and raising expectations of an interest rate hike, economists said.
The figure was the highest inflation reading since the 10.5 percent in January 1999. It was also the top end of the central bank’s forecast range of 8.8-9.6 percent.
A median estimate in an ABS-CBN poll of five economists had placed May inflation at 8.8 percent.
Core inflation, which excludes some volatile food and energy items, reached an annual 6.2 percent last month compared to 5.9 percent in April.
Inflation in April came in at 8.3 percent from the year-ago level.
“That was a big number this morning, even higher than we had been expecting. We do think this increases the chance of a 25-basis-point increase,” said Frederic Neumann, an economist at HSBC.
“At the margin, the central bank may even raise it by 50-basis-points. However, we think they will only deliver on the 50-basis-point increase only by the third quarter,” he said.
The Bangko Sentral ng Pilipinas (BSP) last slashed its benchmark interest rates on January 31 to a record low of 5.0 percent for overnight borrowing and 7.0 percent for overnight lending.
The market has been expecting a tightening in monetary policy since consumer prices started picking up at the start of the year. (abs-cbn)
The figure for May brings average inflation in the first five months to 6.92 percent, well above the government’s 2008 target of 3.0-5.0 percent.
The BSP said, however, that monetary instruments are not the appropriate tool to address runaway inflation, which is pushed by rocketing global prices of oil and commodities.
It said that the use of these instruments has a limited effect on supply shocks.
The BSP also said that it would “act decisively and adjust monetary policy settings accordingly as and when second-round effects of supply shocks become evident.”
Forecast Pte Ltd economist Vishnu Varathan said, “I am sticking to my no-change (in interest rates) call.”
“The caveat is that signs of second round effects will be the trigger and the central bank indicates that there are no signs of one yet,” he said.
Consumer prices rose 1.5 percent in May, slower than the 2.0 percent rise in April.
Inflation for food alone jumped to 14.3 percent last month from 12.0 percent in April while that for fuel, light and water rose to 8.2 percent from 8.0 percent.
The Philippines imports almost all of its fuel requirements. The country is also a major importer of its staple food, rice.
“At the margin, the central bank may even raise it by 50-basis-points. However, we think they will only deliver on the 50-basis-point increase only by the third quarter,” he said.
The Bangko Sentral ng Pilipinas (BSP) last slashed its benchmark interest rates on January 31 to a record low of 5.0 percent for overnight borrowing and 7.0 percent for overnight lending.
The market has been expecting a tightening in monetary policy since consumer prices started picking up at the start of the year. (abs-cbn)
The figure for May brings average inflation in the first five months to 6.92 percent, well above the government’s 2008 target of 3.0-5.0 percent.
The BSP said, however, that monetary instruments are not the appropriate tool to address runaway inflation, which is pushed by rocketing global prices of oil and commodities.
It said that the use of these instruments has a limited effect on supply shocks.
The BSP also said that it would “act decisively and adjust monetary policy settings accordingly as and when second-round effects of supply shocks become evident.”
Forecast Pte Ltd economist Vishnu Varathan said, “I am sticking to my no-change (in interest rates) call.”
“The caveat is that signs of second round effects will be the trigger and the central bank indicates that there are no signs of one yet,” he said.
Consumer prices rose 1.5 percent in May, slower than the 2.0 percent rise in April.
Inflation for food alone jumped to 14.3 percent last month from 12.0 percent in April while that for fuel, light and water rose to 8.2 percent from 8.0 percent.
The Philippines imports almost all of its fuel requirements. The country is also a major importer of its staple food, rice.
| < Prev |
|---|