HIGHER food prices, a weaker peso and costlier fuel could push inflation beyond target this month, the Bangko Sentral ng Pilipinas (BSP) said Friday.

The central bank's estimate of 3.4 to 4.2 percent still allows for a potential decrease from May's 3.9 percent, but also extends beyond its 2.0- to 4.0-percent target.

It should also be noted that the central bank also had a much higher forecast for May of 3.7 to 4.5 percent.

Data for June will be released by the Philippine Statistics Authority on Friday next week.

A result higher than 4.0 percent would end a six-month run of within-target inflation and could prompt the BSP shelve its plan to start lowering key interest rates in August.

"Increases in the prices of agricultural commodities like rice, vegetables, meat and fish, along with the peso depreciation and higher domestic oil prices, are the primary sources of upward price pressures for the month," the central bank said in a statement.

"Meanwhile, lower electricity rates and fruit prices could contribute to the deceleration in inflation," it added.

The central bank said it would "continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation."

BSP Governor Eli Remolona Jr. on Thursday said that monetary authorities still expected inflation to breach target until July but then decline for the rest of the year.

The central bank's policymaking Monetary Board kept key rates unchanged for a sixth consecutive meeting this week and also lowered its inflation forecasts for 2024 and next year.

The risk-adjusted forecast for this year was trimmed to 3.1 percent from 3.8 percent and that for 2025 was also cut to 3.1 percent from 3.7 percent.

The baseline forecasts for 2024 and 2025, meanwhile, were lowered to 3.3 percent and 3.1 percent, respectively, from 3.5 percent and 3.3 percent.

The BSP's benchmark rate currently stands at 6.5 percent, the highest since 2007, after 450 basis points of rate hikes beginning May 2022 as inflation started surging in the wake of Russia's invasion of Ukraine.

Remolona on Thursday said that two cuts totaling 50 basis points could be ordered this year.

Capital Economics senior economist Gareth Leather said that the economy was in need of support, making it more doable for an August cut.

"With fiscal policy being tightened, interest rates at multiyear highs and exports likely to struggle, we expect growth to remain weak," he said.

"The timing of rate cuts will in large part be determined by the inflation outlook," he added.

Leather expects inflation to fall back sharply in the second half, helped by "base effects, an increase in the supply of agricultural products and slower economic growth."