The Philippine central bank BSP said that prices would spike by as much as 11 percent in August or September, mainly due to high oil prices in the world market, media reports said on Tuesday.
After that, BSP officials said, inflation is expected to go back within the 4 percent to 6 percent projection for 2009, Philippine TV network GMA News reported.
"We see the possibility of a 10 to 11 percent peak in either August or September and then by the fourth quarter, it would go downs gradually," BSP Deputy Governor Diwa Guinigundo said.
"By 2009, we should be back broadly to 4 to 6 percent," Guinigundo said.
The BSP's 4 percent to 6 percent projection, however, is still above its official target of 2.5 percent to 4.5 percent for 2009.
According to Guinigundo, high oil prices are the major factor behind the rise of inflation to double-digit levels.
Guinigundo said the BSP expected oil prices to start going up again in July, August and September as major oil buyers start stockpiling for the winter.
"No one knows where it is going to peak but given the current average, it means we are expecting the highest possible oil price trajectory beyond June. Since last year oil prices surged at around the third quarter, we read that as a possibility that it will rise at around the same time again," he said.
Projections of high inflation strengthen market expectations that the central bank's Monetary Board would continue to tighten its policy settings to bring inflation back to the targeted range in 2009.
Because of dramatic increases in oil prices, the BSP has already conceded its 2008 inflation target and monetary officials said inflation rate would also go beyond the 2009 target.
The central bank raised its policy rates by 25 basis points in its most recent meeting, saying it projected the inflation rate to reach 7-9 percent in 2008 and 4-6 percent in 2009, above the targets of 3 percent to 5 percent and 2.5 percent to 4.5 percent for both years respectively.
Source: Xinhua
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