May 31, 2018 / 5:03 AM / in 21 days

Philippines central bank sees inflation in May staying above target

MANILA (Reuters) - The Philippine central bank said on Thursday the annual inflation rate in May would likely remain outside its 2-4 percent comfort range due to higher fuel and rice prices.

A woman arranges vegetable in a market stall in Edsa Kamias in Quezon City, metro Manila, May 23, 2018. REUTERS/Dondi Tawatao

The Bangko Sentral ng Pilipinas (BSP) forecast an inflation range of 4.6-5.4 percent for May, above the 4.5 percent reading in April, which was the fastest in at least five years.

The forecast took into account higher domestic petroleum prices, blamed on geopolitical tensions in the Middle East, a sustained increase in rice prices and lower costs for power and some food items, the central bank said in a statement.

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“Going forward, the BSP will remain watchful of evolving price trends and ensure that the monetary policy stance remains appropriate to maintain price stability that is conducive to a balanced and sustainable economic growth,” the central bank said.

Some economists expect the central bank to raise interest rates for a second time in a row at its June 21 meeting. It increased rates on May 10 for the first time in more than three years to tame price pressures and manage inflation expectations.

Average inflation is forecast to reach 4.6 percent in 2018, the central bank has said, quicker than the previous year’s 2.9 percent. Inflation in 2019 would average 3.4 percent.

Reporting by Karen Lema; Editing by Neil Fullick

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