MANILA – Headline inflation rate for May this year is expected to slightly ease to 3.3 percent year-on-year, IHS Markit Asia Pacific Chief Economist Rajiv Biswas said.
Biswas attributed the slower pace on consumer price index (CPI) to the declining world oil prices as well as the moderation on food inflation.
“The headline CPI inflation rate for May is forecast to edge lower to 3.3 percent year-on-year, slightly below the 3.4 percent pace of inflation in April,” the economist said in an e-mail.
“CPI inflationary pressures are expected to stabilize in the second half of 2017, remaining within the BSP’s target CPI inflation range of 2.0 to 4.0 percent during the rest of 2017. This is based on our expectation that world oil prices will average around USD55 (per barrel) for Brent crude during 2017,” he added.
Should world oil prices move sharply, Biswas said this would push significant upturn on inflation outlook and trigger tightening of monetary policy.
But he noted that the central bank’s monetary policy decision will be based on domestic inflation than the policy tightening of the United States Federal Reserve.
“With headline CPI inflation having moved towards the upper end of the BSP’s target range and domestic economic growth momentum expected to remain strong during 2017, the BSP’s monetary policy stance is expected have a tightening bias,” Biswas said.
“While the US Fed is expected to hike rates two more times in 2017, the BSP’s own monetary policy decision will focus on domestic inflation and GDP growth momentum in the Philippines, rather than US Fed policy moves,” the economist noted.
The government is expected to release on Tuesday (June 6) the inflation data for the month of May.
