The Philippines' central bank Bangko Sentral ng Pilipinas (BSP) would not rule out still higher inflation numbers over the next three months, with rates hitting 5 percent or higher as electricity rates and oil prices push inflation onto higher ground.
BSP Deputy Governor Diwa Guinigundo said by email Sunday that inflation was to peak between July and September, and the inflation rate could top 5 percent.
"It is very difficult to rule that out in the face of volatile petroleum prices," said Guinigundo.
Inflation in June stood at a 26-month high of 4.6 percent and an acceleration from the previous month when it averaged only 4.5 percent.
The acceleration has boosted the likelihood of continuing the tightening cycle the BSP started in March when it raised its policy rates by 25 basis points and again in May with a similar rate hike.
Economists at the Standard Chartered Bank and at the HSBC believe two more 25-basis point rate hikes can be expected before the end of the year.
More recently, Assistant Governor Maria Cyd Tuano-Amador said the BSP "will not rule out any particular tool to manage inflation, " a reference to the persistent market talk about the central bank pushing the banks' deposit reserves a notch or two higher.
But while Guinigundo candidly acknowledged persistent pressure for inflation to move towards higher ground, he remained confident the full year inflation rate should still be within the 3 to 5 percent target range.
"In the absence of a complete reassessment of the forecast, what we can say is that broadly speaking the expectation is (for inflation) to lie close to the midpoint," he said.
He also said it was difficult for the BSP to rule out further shocks and by extension the likelihood of another tightening cycle.
"The upward risks are still dominant," he reiterated.
So far, the country's actual inflation in the first six months averaged 4.26 percent or well within the target range of 3 percent up to 5 percent for the year.