Finance Secretary Ralph G. Recto said that the inflation rate may move at a much faster pace in July, while the impact of Typhoon Carina on the prices of goods is expected to be felt in the following months.

“I think, coming from a low base, the inflation will be higher, but still within target for the entire year of two to four percent,” Recto told reporters.

On Wednesday, the Bangko Sentral ng Pilipinas (BSP) said that it expects inflation to exceed the upper end of the target range in July, with a forecasted range of 4.0 percent to 4.8 percent. This marks the first time this year that the forecast range has surpassed the upper end of the target.

Recto, however, noted that while higher inflation may occur, it could be balanced out by lower rice prices resulting from tariff cuts, decreased fruit prices, and peso appreciation.

The BSP has been keeping monetary policy tight, maintaining its benchmark rate at 6.5 percent for almost a year now, in a bid to reduce inflation.

However, BSP Governor Eli Remolona has been hinting at a possible rate cut by August. Its next monetary policy-setting meeting is on Aug. 25

Meanwhile, the DOF chief also maintained that the gross domestic product (GDP) for the second quarter will be faster compared to the previous quarter on the back of higher consumption and government spending, and lower inflation.

During the first quarter, the country’s economy grew 5.7 percent, higher than the 5.5 percent clip seen in the fourth quarter of 2023, but lower than the 6.4 percent growth seen in the first quarter of last year.

Analysts from Metrobank subsidiary First Metro Investment Corp. (FMIC) and its research partner the University of Asia and the Pacific (UA&P) said that the second quarter GDP is expected to grow by 5.9 percent.

The government has set a GDP growth target of six percent to seven percent for 2024.