THE increase in consumer prices in May this year may have hit the slowest growth for the entire year, several economists said.
Local and international private economists polled by the BusinessMirror said, inflation is likely to decelerate further owing to low oil and rice prices.
The forecasts of seven economists yielded an average of 2 percent for the month. If fulfilled, May’s inflation rate will be the lowest for the country since August 2009, when inflation hit 1.7 percent.
In particular, Bank of the Philippine Islands (BPI) economist Nicholas Antonio Mapa said inflation would likely hit 1.9 percent in May this year, owing to lower food increase and a drag in global crude-oil prices.
Standard Chartered economist Jeff Ng also forecasted inflation to hit 1.9 percent during the month, as base effects for food inflation continued to ease.
Meanwhile, DBS Bank economist Gundy Cahyadi, Maybank Kim Eng economist Luz Lorenzo and Security Bank economist Patrick Ella are all of the view that inflation will hit 2 percent in May.
ING Bank’s Joey Cuyegkeng sees inflation hitting 2.1 percent, while Banco de Oro chief market strategist Jonathan Ravelas said he expects inflation to hit 2.19 percent in May.
Not for long
AMID the low forecasts for May, economists agree that inflation will not stay this low for long, as price pressures are starting to build up toward the second half of the year.
“Downtrend is extended with lower rice prices, but prices of other food items may start to rise due to the effects of the dry spell,” Cuyegkeng said.
In particular, BPI’s Mapa said that inflation will likely be subdued for another month, before it reverses to settle somewhere in the middle to upper half of the Bangko Sentral’s inflation target by the end of the year. This is also due to, aside from the effects of El Niño, the washed-out base effects from the oil-price movements seen earlier.
“While the central bank has room to ease policy rates near term, it is likely to watch for higher inflation by end-2015 and potential US policy rate hikes. Growth momentum will be a swing factor,” Standard Chartered’s Ng, meanwhile, said.