Inflation seen to stay in Q2 at 3.4%-3.5%

Inflation rate is expected to settle at the 3.4 percent to 3.5 percent level until June with a stable outlook for food and fuel prices.

“(The) headline inflation will remain at the 3.4 percent to 3.5 percent for the rest of the second quarter as food supply has normalized, while crude oil prices have again gone below $50 per barrel for brief periods,” according to economists of First Metro Investments Corp. and University of Asia and the Pacific.

For the first four months, inflation has averaged at 3.2 percent which is within the Bangko Sentral ng Pilipinas’s (BSP) target range of two percent to four percent for 2017. Core inflation or inflation minus the “volatile” food and energy items is at three percent in April.

FMIC-UA&P said the “more efficient shale oil producers and desperate economic conditions in Russia, Libya, Nigeria, Iran and Iraq will cap any tendency for prices to rise unto the third quarter.”

“As money growth remains moderate and inflation keeps within the BSP’s target range, we do not expect a policy rate hike in