The central bank expects inflation this month will settle between 3.9 percent and 4.7 percent, not far from the 4.1 percent rate recorded in April, with the impact of higher food prices offset by lower gas and electricity rates.
“Inflationary pressures could stem from the observed uptrend in food prices, particularly rice and sugar,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in a text message to reporters on Wednesday.
However, a drop in petroleum prices and electricity rates during the month could partly temper the impact of such upward pressures, he added.
Tetangco said the BSP will continue to keep a watchful eye on the risks to price stability and implement appropriate policy actions as necessary.
Last month, inflation ran at 4.1 percent, well within the 3 percent to 5 percent allowable range set for 2014.
For this year, inflation is projected to average 4.3 percent, with the possible effects of the El Niño phenomenon on food and non-food agricultural prices in the latter part of the year factored in.
Based on its assessment that the future inflation path is likely to stay within the target ranges of 3 percent to 5 percent for 2014 and 2 percent to 4 percent for 2015—the BSP during its May 8 monetary policy meeting decided to keep its policy interest rates steady.
At the same time, the Monetary Board decided to increase the reserve requirement for banks by another one percentage point effective on May 30 to guard against risks that could arise from strong domestic liquidity. The next monetary board meeting is scheduled for June 19.