Philippines – May inflation probably eased but pressure likely building

The Philippines will release May CPI data on 5 June. Inflation is expected to have eased to 1.9% y/y from 2.2% in April. This will likely bring YTD inflation to 2.3% y/y, versus the central bank's full-year target of 2-4%. Base effects for food inflation probably continued to ease. 

"We see signs of pressure building. We forecast m/m inflation of 0.2%, the same as in April, but higher than the 0.1% average in Q1", says Standard Chartered.

Energy inflation is also likely to return gradually, improving oil prices are expected to prompt petrol and utility price hikes. 

While the central bank has room to ease policy rates near-term, it is likely to watch for higher inflation by end-2015 and potential US policy rate hikes. Growth momentum will be a swing factor.