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* May inflation quickens for first time since September
* Faster inflation due to higher food and utility costs
* Core inflation at 3.5% vs 3.4% in April
MANILA, June 5 (Reuters) - Philippine annual inflation quickened in May for the first time in eight months due to a rise in food and utility prices, the government’s statistics agency said on Wednesday.
The consumer price index rose 3.2% in May, faster than the previous month’s 3.0% and above the 2.9% forecast in a Reuters poll.
It was the first time since September 2018 that inflation has accelerated but the outcome was within the central bank’s 2.8%-3.6% projection for the month.
May inflation brought the average rate in the first five months of the year to 3.6%, within the central bank’s 2%-4% target for the year.
Core inflation, which strips out volatile food and fuel items, was 3.5%, picking up from April’s 3.4%. Inflation on a month-on-month basis was 0.2%.
Financial markets were closed on Wednesday for the Eid-Al-Fitr holiday.
Economists expect inflation to stay benign in the coming months in parts due to base effects, with some pencilling in further cuts in the policy rate and banks’ required reserves.
The central bank expects inflation to average 2.9% this year and 3.1% next year, well within its 2%-4% target for both years.
The central bank started to unwind last year’s policy tightening with a 25 basis point cut in its policy rate last month to support slowing growth.
This move was followed by a three-step reduction in banks’ required reserves that would bring the ratio to 16% from 18% by July.
To rein in red-hot inflation last year, the central bank had raised its key policy rate by a total 175 basis points to 4.75%.
It would next meet on June 20 to review its monetary policy. (Reporting by Karen Lema; Editing by Rashmi Aich)