Rising prices of food are expected to put the greatest upward pressure on inflation, even as the surge in energy costs continues to be the dominant concern in Southeast Asian markets including the Philippines.
At the same time, analysts see inflation in May having risen above 5 percent, in line with the forecast of the Bangko Sentral ng Pilipinas (BSP). The central bank expects inflation to rise to within the range of 5 to 5.8 percent.
In a commentary, HSBC Global Research said that energy and food were becoming increasingly costly even in countries that are tempering the impact of rising prices with subsidies and price controls, such as Indonesia and Malaysia.
But even in the Philippines, the Duterte administration is providing targeted fuel subsidies of P6,500 to each public utility vehicle driver as well as through a fuel subsidy program for 159,000 farmers and fisherfolk.
HSBC said that inflation pressures were particularly acute in the Philippines along with Singapore and Thailand, which all depend on imported oil.
HSBC added that after the surge in energy prices, food costs now pose the main risk to inflation across Southeast Asian economies.
In separate commentaries, Security Bank Corp. estimated that inflation on May might have hit 5.4 percent year-on-year.
GoldmanSachs Economic Research put forward an estimate of 5.3 percent, mainly due to higher energy prices.
Capital Economics puts it at 5.2 percent, rising further to peak over the next couple of months and then start to fall back in the second half of the year.
BSP Governor Benjamin Diokno earlier hinted that another increase of the regulator’s overnight borrowing rate may be expected at the next policy meeting later this month.