May inflation likely between 2.8-3.6%
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Fri, 31 May 2019 16:25:04 +0000
INFLATION likely eased to as low as 2.8 percent or picked up to 3.6 percent last month, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
In a statement, the central bank said its Department of Economic Research projected consumer price growth “to settle within the 2.8-3.6-percent range” in May — which is lower that the five-year high of 4.6 percent posted a year earlier.
Headline inflation eased to a four-year low of 3.0 percent in April from 3.3 percent in March.
The Philippine Statistics Authority (PSA) is set to release official May inflation data on June 5.
The BSP said “upside price pressures could emanate from the jeepney fare adjustment in Central Visayas and higher prices of selected food items.”
“At the same time, positive base effects could account for temporary price pressures in May,” it added.
“Meanwhile, lower rice and domestic oil prices, alongside [the] downward adjustment in electricity rates, are seen to temper inflation for the month,” the Bangko Sentral noted.
Latest PSA data show that prices of the staple decreased in the third week of May, with the average wholesale price dipping by 0.1 percent from P39.53 per kilo the week before.
According to the Department of Energy, most oil companies implemented a price cut of 35 centavos for gasoline, 45 centavos for diesel and 60 centavos kerosene effective last Tuesday.
On the other hand, the Manila Electric Co.’s per kilowatt-hour (kWh) rate for households consuming 200 kWh monthly was trimmed by P10.2866 last month.
“Looking ahead, the BSP will continue to be watchful of evolving price trends to ensure that the monetary policy stance remains consistent with maintaining price stability,” the central bank said.
Following a series of rate hikes last year, monetary authorities reduced the Bangko Sentral’s overnight borrowing, lending and deposit rates by 25 basis points (bps) to 4.50 percent, 5 percent and 4 percent, respectively, on May 9.
Also on Friday, London-based economic research firm Capital Economics said it forecast May inflation to settle at 2.5 percent on account of lower rice and oil prices.
In a report, Capital Economics said “[w]eekly data show that rice prices have continued to fall, despite weather-related disruption to the harvest, as imports have bolstered supply.”
“Meanwhile, having rebounded since February, gasoline prices dropped back in May, suggesting easing pressure on the headline rate from transport price inflation,” it added.
“If inflation continues to fall back as we expect, then the central bank is likely to continue its easing cycle.”
Capital Economics also said it was “forecasting another two 25-bps cuts to the policy rate, taking it down to 4.00 percent by the end of 2019.”
“We also expect another round of cuts to the RRR (reserve requirement ratio), which would take the rate down to 14 percent by yearend,” it added.
The BSP earlier ordered a 200-bps cut on the 18-percent liquidity-mopping tool, to be implemented in in three stages. The first 100-bps reduction took effect on Friday, and will be followed by a 50-bps decrease on June 28 and another 50-bps cut by July 26.
WITH ANNA LEAH E. GONZALES
The post May inflation likely between 2.8-3.6% appeared first on The Manila Times Online.