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May inflation seen at 2.3%-2.4%


Economists forecast the inflation rate for the month of May could reach a high of 2.3 percent to 2.4 percent, close to the central bank’s midpoint projection of 2.3 percent.

Union Bank of the Philippines chief economist, Ruben Carlo Asuncion, in a commentary, said rising rice and fuel prices could push inflation higher to 2.4 percent from 2.2 percent in April while Security Bank Corp.’s senior economist, Robert Dan Roces, said it could settle at 2.3 percent.

Asuncion said that since rice and petroleum prices are “critical drivers of price levels in the economy” and these are going up, he thinks the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) will not likely touch benchmark rates anytime soon, after reducing the policy rate by a cumulative 125 basis points in the first quarter.

“This May inflation view could mean the BSP holding off additional monetary policy rate cuts this second quarter as inflationary pressures lingers on amidst the COVID-19 pandemic. The BSP may have to consider its other liquidity tools in addressing needs of the financial system moving forward,” said Asuncion.

For the whole of 2020, Union Bank’s economic research projects 2.8 percent inflation which is more than BSP’s own flat two percent estimate for this year.

Security Bank’s Roces said their forecast range for May inflation is 2.1 percent to 2.5 percent versus BSP’s 1.9 percent to 2.7 percent.

“For the month, rising prices in the food basket were observed, while pump prices have gone up in the last week as market activities slowly emerge from hibernation with the easing of quarantine measures in some parts of the country,” said Roces. “Price pressures appear to be on a stable trend.”

After May, while not specifying the period, Roces said inflation will remain benign. “We expect inflation to remain subdued at (two percent) levels in the meantime, on still relatively low oil prices and reduced demand for most non-essential goods.”

On the other hand, according to Asuncion, April’s reasons for a lower inflation or from March’s 2.5 percent down to 2.2 percent are no longer there, such as the decline in the transport index.

“Another driver of a potential uptick in headline inflation this May is the continuing rise of rice prices,” said Asuncion. Since March, while on enhanced community quarantine, he said that the wholesale and retail prices of regular and well-milled rice have “consistently risen” based on Philippine Statistics Authority (PSA) data.

Source: Manila Bulletin (

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