May inflation projected at 3%

Inflation in the Philippines is expected to have settled at 3 percent year on year in May, the same level as in April, according to financial services provider DBS Group.

In a research note, DBS said the rise in consumer prices was unlikely to be a problem in the coming quarters amid a sluggish global growth outlook.

“Oil prices, which have been the main driver of inflation over the past year, have fallen significantly over the last few weeks as the eurozone crisis worsens,” DBS said.

“There also has not been any immediate threat of rising food prices as rice output is projected to be ample in (the first semester),” it added.

The Singapore-based group said that while the strong growth in the first quarter might raise concerns about rising inflation, the growth momentum was unlikely to be sustained in the second semester and price pressures should remain manageable.

Last week, the National Statistical Coordination Board released data that showed a higher-than-expected economic growth rate of 6.4 percent for January to March. Many analysts expected a figure of less than 5 percent.

DBS itself had projected a mere 4.3-percent gross domestic product growth for the period despite improvements in exports, government expenditures and inflows of remittances.

DBS said last month that the outlook for the remaining quarters “has turned decidedly cloudier” because, despite the surge in electronics demand in the early months of this year, it was far from clear that final demand would pick up in the second semester.