Philippine Rate Hike Still On Track Despite Softer Inflation Print

Despite a slowdown in headline inflation driven by lower transport costs, ING maintains its forecast for a 25bp rate hike from the Bangko Sentral ng Pilipinas in June. Persistent food inflation and rising core prices remain significant upside risks.

Key Takeaways

• 1.Headline inflation in the Philippines eased to 6.8% YoY in May, but the central bank is expected to proceed with a 25bp rate hike in June.
• 2.Food inflation remains high and broad-based, with rising rice and non-rice prices offsetting gains from lower transport costs.

Table of Contents

• Inflation undershoots expectations
• Transport drives decline; food and services hold steady
• Rising risks; we maintain our call for June rate hike
• Rollback in fuel prices drove CPI inflation lower

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