Inflation will likely reach 5–5.8% in May - BSP

Inflation will likely hit a new three-year high this month given the continued increase in domestic petroleum prices, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

According to BSP Governor Benjamin Diokno, inflation is likely to have settled within the 5.0% to 5.8% range this month, faster than the 4.9% recorded in April, which was the highest since December 2018.

“The continued increase in domestic petroleum prices, higher prices of key food items, and peso depreciation are the primary sources of inflationary pressures during the month,” Diokno told reporters in a text message.

Year-to-date adjustments show a net increase of P25.55 per liter for gasoline, P29.10 per liter for diesel, and P25.20 per liter for kerosene as of May 24, 2022, according to the Department of Energy.

Meanwhile, the Philippine peso closed Tuesday at P52.37: $1, weaker than Monday’s finish of P52.31: $1.

Diokno noted, however, that these could be partly offset by cheaper electricity rates of the Manila Electric Company (Meralco), reduced prices of liquefied petroleum gas (LPG), and lower rice prices.

“Looking ahead, the BSP will continue to monitor closely emerging price developments to enable timely intervention to arrest emergence of further second-round effects, consistent with BSP’s mandate of price and financial stability,” he said.

The BSP this month hiked key policy rates by 25 basis points, marking the first tightening since 2018.

The central bank expects the full-year inflation print at 4.6%, which is within the 3.7% to 4.7% target set by the Development Budget Coordination Committee last week, before slowing down to 3.9% in 2023. —VBL, GMA News