Inflation reaches 30-month high; hike in interest rates seen

MANILA, Philippines — Consumer prices rose to its fastest rate since 2011 in May as food became more expensive due to the damage to farmlands caused by Super Typhoon “Yolanda” (Haiyan).

The Philippine Statistics Authority (PSA) showed inflation rose to 4.5 percent in May, accelerating from 4.1 percent the month before. This was within but near the high end of the Bangko Sentral ng Pilipinas (BSP) target range of 3 to 5 percent.

“A rate hike from the BSP may no longer be impossible,” Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. said in a note to investors following the release of inflation data.

BSP Governor Amando M. Tetangco Jr. on Thursday took a hawkish stand, signaling a hike in interest rates to curb consumer demand and offset higher prices.

“The BSP will not hesitate to adjust policy settings should the inflation target be at risk,” Tetangco said.

Benchmark overnight borrowing and lending rates have stood at record lows of 3.5 and 5.5 percent since October 2012.