Foreign banks are turning more hawkish on domestic consumer prices than the central bank, warning that expiring price freezes and unabsorbed food costs will drive inflation beyond official projections.

Frankfurt-based Deutsche Bank AG has an inflation forecast of 8.1 percent for May, breaching the 7.9 percent, or the upper bound of the BSP’s own projected range.

Deutsche Bank economists wrote in a commentary published last week that while fuel pump prices saw a retreat from their April peaks, these gains were largely erased by higher utility costs.

Specifically, the lender pointed out that electricity rates in May jumped by 16 percent on a year-on-year basis, a sharp acceleration from the 10 percent increase recorded in April.

Meanwhile, despite this massive yearly spike, the actual cost of electricity for consumers in May was slightly lower than the previous month on a month-on-month basis.

Deutsche Bank further cautioned that price pressures are mounting across other sectors, noting that “basic goods prices are expected to rise after price freezes faded from May 10, while the passthrough of retail rice prices to headline inflation is still incomplete.”

Even more bullish in its outlook is the Singapore-based DBS Bank, which projects that inflation accelerated to 8.3 percent during the month.

DBS economists anticipate further spikes in the inflation rates of both the Philippines and Indonesia. “Outcomes are partly policy-filtered, with differences in retail price inflation reflecting varying levels of subsidy support and pass-through mechanisms,” DBS said.

It also warned that “weather-related impact on food crops will also have varying effects on food inflation” across the region.

Meanwhile, think tank Moody’s Analytics has forecast the inflation rate to have eased to 6.5 percent last month, a decline from the three-year high of 7.2 percent seen in April.

Apart from inflation, DBS observed that financial market volatility has begun to dictate the policy trajectory for both the Bangko Sentral ng Pilipinas (BSP) and Bank Indonesia (BI). This brought the Singaporean lender to expect both central banks to continue raising interest rates throughout 2026.

For the Philippines, DBS expects the BSP to implement a steady tightening cycle throughout the year. It expects the current benchmark rate of 4.5 percent to increase to 4.75 percent in the second quarter, before peaking at 5.25 percent by the third quarter.

This rate of 5.25 percent is projected to remain unchanged through the end of 2027 as the central bank works to anchor long-term inflation expectations.