Headline inflation is likely to settle within the 2.9 percent to 3.7 percent range in May, as a result of lower utility rates and oil prices, the central bank said on Friday.
The rate stood at 3.4 percent in April.
“The lower prices of domestic oil as well as the downward adjustment in electricity rates could exert downside influence on inflation, which could be partly offset by higher rice prices,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in a text message to reporters.
Philippine Statistics Authority (PSA) data showed the average retail price of well-milled rice rose by 0.27 percent to P41.69 per kilogram as of the second week of May, from P41.58 per kg the previous week. It was also up 1.06 percent year-on-year.
Regular milled rice is currently selling at P37.38 per kg, up 0.16 percent week-on-week and by 1.39 percent from a year earlier.
For full-year 2017, the BSP expects inflation to hit 3.4 percent, or within the target 2 percent to 4 percent.
The BSP said economists in its survey had a consensus forecast of 3.4 percent on average for the year, citing upward pressures from a weak peso, high global crude prices, tax reform, electricity rates and government spending on infrastructure.
Higher consumption taxes, together with demand stimulus from the fiscal reform program, are expected to further stoke inflation, the central bank said.
“Moving forward, the BSP will continue to monitor evolving price conditions in line with the BSP’s commitment to price stability conducive to balanced and sustained economic growth,” Tetangco said.