Philippines' inflation pegged to hit 2.8%

Will price pressures remain manageable?

According to DBS, inflation numbers are due on Wednesday and a print of 2.8% YoY is expected. The economy has not been showing any signs of overheating despite the breakneck pace of growth over the past wo quarters, where average GDP growth in YoY terms reached 7.5%. 

Here's more from DBS:

Food and energy prices are the biggest skew to inflation given their large weightings in the CPI basket. However, food and oil prices have been benign over the past four quarters with food inflation running at 2.2% YoY and transport inflation running at-0.7% YoY in April.

Given the lackluster outlook to the economy and barring bad weather conditions (impacting on localfood production), price pressures are likely to stay manageable in the coming months.

Structurally, the high unemployment rate may also help to reduce wage pressures even asthe economy movesto a higher growth trajectory of 6-8%.