- Published on Tuesday, 04 June 2013 21:06
- Written by Bianca Cuaresma / Reporter
Inflation in the Philippines was expected to have remained at a low level in May this year, analysts at a Singapore-based bank said on Tuesday.
Easing oil prices the past few months and stable food prices were seen to have allowed inflation to drift low to the forecast rate of 2.8 percent in May, according to a research note released on Tuesday by the Development Bank of Singapore (DBS).
“Benign food and energy prices have allowed headline inflation to drift lower, putting the economy firmly in a sweet spot of high GDP [gross domestic product] growth and low inflation,” its analysts said.
According to DBS, food prices, which account for the largest portion of the consumer price index , posted an increase of just 2.2 percent. The bank also said the transport component was also notably low and registered a 0.7- percent decrease in April.
Following the robust GDP growth in the first three months, DBS forecast a “mild updrift” in inflation the rest of the year as the growth momentum is sustained.
Cuts in the Bangko Sentral ng Pilipinas’s special deposit account window in tandem with high unemployment rate were also seen to tell on the country’s growing economy.
“A likely pickup in the pace of loan growth after hefty cuts in the special deposit account rate should also help to stimulate economic activity in the coming months,” DBS said.
“Structurally, the high unemployment rate may also help to reduce wage pressures even as the economy moves to a higher growth trajectory of 6 perccent to 8 percent,” the bank added.
April’s inflation rate stood at 2.6 percent, the lowest since March last year. The 13-month low inflation rate was largely attributed to slower price increases for non-food items and reductions in the prices of domestic petroleum products.
The National Statistics Office is set to release the official May inflation rate on Wednesday.
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