May headline inflation went up by 3.2%, higher than expected with consensus expectation at 2.9%. The uptrend was primarily due to higher annual rates posted in the heavily-weighted food and non-alcoholic beverages and housing, water, electricity, gas and other fuels indices.

However, there were significant slower annual growth in other indices such as, alcoholic beverages and tobacco, transport, and restaurant and miscellaneous goods and services. The higher-than-expected inflation print was highlighted to be “temporary” by the BSP. The increase may have been the impact of the damage brought about by El Nino. 

UnionBank’s Economic Research Unit (ERU) sees the BSP looking more to the long-term trend of global oil prices for further action on monetary policy. With world oil prices expected to continue to ease, BSP may more likely continue its policy rate cuts.

Report by Ruben Carlo Asuncion

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