MANILA (Reuters) – Annual inflation in the Philippines sped up by less than expected in May, but still exceeded the central bank’s 2-4 percent target band, keeping an interest rate hike on the central bank’s cards.
The consumer price index rose at 4.6 percent in May because of food and fuel price increases, the statistics agency said on Tuesday.
The CPI topped previous month’s 4.5 percent rate but still came in below the 4.9 percent forecast in a Reuters poll.
May’s price growth was at the bottom of the central bank’s 4.6 percent to 5.4 percent inflation forecast for May.
However, inflation was still at its highest in at least five years based on available data. The government rebased the inflation index using 2012 as base year and it has only provided data from 2013 to present.
Core inflation, which strips out volatile food and fuel costs, was 3.6 percent year-on-year, up slightly from 3.5 percent in April.
Budget Secretary Benjamin Diokno said there was no need to adjust the 2-4 percent inflation target band, with year-to-date inflation of 4.1 percent still close to the range.
The central bank increased policy rates by 25 basis points on May 10, the first hike in more than three years, to tame price pressures and manage inflation expectations.
Central bank Governor Nestor Espenilla said in a text message to reporters the inflation outlook continued to be a concern, and the bank would “consider what further adjustments are necessary to firmly anchor inflationary expectations”.
Just six of 10 analysts in the Reuters survey offered forecasts on the central bank policy rate, with only one respondent predicting another rate hike at the policy review scheduled for June 21.
Most of them projected another rate hike in the third or fourth quarter.
(Reporting by Karen Lema; Editing by Martin Petty and Eric Meijer)