(June 5): Inflation has decelerated in the Philippines and Thailand as global crude costs eased, giving their central banks more breathing room as they assess the need to further raise interest rates.
Philippine consumer prices rose 6.8% in May from a year earlier, a slower pace than the 7.2% notched in April. The Thai inflation rate slowed to 2.79% from 2.89% in the same period.
Both economies saw energy, transport and food inflation ease, thanks to lower oil prices in global markets as the US and Iran continued to negotiate a ceasefire in May. Consumer spending also softened last month as households sought to manage their costs, officials said.
With no clear resolution in sight for the Iran war, and Southeast Asia heavily reliant on oil from the Middle East, both nations warned price pressures could still ramp up in coming months.
Still, the latest inflation data should give the Philippine and Thai central banks space to weigh monetary tightening with economic growth still sub-par. The Reserve Bank of India held its key rate on Friday to first assess the inflation outlook before acting.
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“We suspect the latest CPI print will take some of the wind out of the Bangko Sentral ng Pilipinas’ (BSP) sails in terms of the urgency for off-cycle policy tightening,” Barclays Plc economist Brian Tan said in a report.
But with Philippine inflation likely staying well above the BSP’s 2%-4% target through April 2027, Tan said there may be another 25-basis point hike on the cards at the June meeting.
Meanwhile, Thai inflation is expected to ramp up in the second half of the year, breaching the central bank’s 1%-3% goal. The Bank of Thailand could look through the supply shock and stand pat, though, with its key rate already at a low 1%, Barclays added.
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