MANILA, Philippines - The 4.3% inflation rate in March may have been tamer than forecasts, but an economist for Hong Kong and Shanghai Banking Corporation (HSBC) said he remains cautious as global oil and food prices remain a threat.
"The battle against inflation is far from over, and we expect the [Bangko Sentral ng Pilipinas] to continue tightening at the next meeting," Sherman Chan, HSBC's economist for ASEAN, said in a report on Tuesday.
He said that they expect the BSP to announce another 25 basis points rake hike when the monetary officials meet on May 5 as global oil and food prices will "trickle down the Philippine economy, leading to further acceleration in inflation over the next 6 months."
Monetary officials hiked rates by 25 basis - the first since 2009 - last March 24.
In the first quarter of 2011, food prices accelerated to 2.3% quarter-on-quarter, compared with the previous increase of 1.3%.
In March, both food and core items showed sharp upticks, pushing the 4.3% inflation to the upper half of the BSP's target band of 3% to 5%.
"We believe there is some way to go before we see the peak in the current cycle, especially in light of the recent spike in global oil prices as well as a continued surge in global food prices," Chan wrote.
He also noted that the impact of the disasters in Japan could "further cloud the region's growth outlook."
"It is too early for the BSP to breath a sigh of relief," he wrote.