MANILA, Philippines--Annual inflation is seen to have fallen to a one-and-a-half-year low in May, a Reuters poll showed, cementing expectations of another rate cut in July, which some analysts said could be the last for the year.

Consumer price index is expected to have risen 3.7 percent in May from a year earlier, a Reuters poll of 12 economists showed, marking the slowest annual rise since November 2007 when inflation was at 3.2 percent.

The central bank had forecast May annual inflation to come in between 3.3-4.2 percent from 4.8 percent in April.

Economists said the inflation drop was due to a stronger currency and base effects from rapid increases in commodity prices in the same period in 2008.

"May inflation numbers would likely show sustained deceleration in price pressures," said Radhika Rao, an economist at IDEAglobal.

"In view of growth risks, the central bank could ease rates by another 25 basis points before hitting bottom for the year."

Economists expect the central bank to deliver its sixth consecutive interest rate cut at its next policy meeting on July 9 to lift economic growth, and probably mark the end of its current rate easing cycle that began in December.

"Some risks to price pressures are arising on the margin and the interest rate is the bastion of price stability targeting," said Vishnu Varathan, an economist with Forecast Pte. in Singapore.

"As such the central bank may not want to turn the interest rate wheel too aggressively. Notably, the central bank will also be considering using non-interest measures to ease monetary conditions further."

Monetary authorities have said they expect inflation to hit bottom in the third quarter and slightly pick up in the following months to hit an average of 3.4 percent by the end of

the year, within the government's 2.5-4.5 percent target in 2009.

The central bank has trimmed rates by a total 1.75 percentage points since December to support the economy, which suffered its biggest contraction in two decades in the first quarter of the year.

The overnight borrowing rate currently stands at 4.25 percent, the lowest in 17 years.