MANILA, Philippines — Policymakers must closely monitor rising consumer prices, with Philippine inflation seen to keep going up to breach the central bank’s target, the International Monetary Fund said on Wednesday.

“Inflation should remain within the target band... but the authorities will need to watch carefully for building inflation pressure, as well as rapid credit growth,” the IMF said in its latest Asia-Pacific regional economic outlook.

The Duterte administration's tax reform law—which lowers personal income taxes while raising excise levies on fuel and cigarettes, among others—has been blamed for the recent jump in prices of widely used goods and services.

Fastest in five years

Using 2012 as base year, inflation in April accelerated to 4.5 percent, the fastest pace in at least five years. The figure brought the year-to-date tally to 4.1 percent, piercing the Bangko Sentral ng Pilipinas' 2-4 percent target range.

Under the rebased index, the IMF expects Philippine inflation to overshoot the central bank’s target to average 4.2 percent in 2018, before cooling down to 3.8 percent next year.

Last week, BSP Governor Nestor Espenilla struck a hawkish tone, saying monetary authorities won't think twice to take “decisive” action should inflation remain elevated.

Espenilla also said inflation may have “spread somewhat” to cover more goods.

The BSP projects inflation to hit 3.9 percent this year and moderate to 3 percent in 2019.

In the same outlook report, the IMF said the Philippine economy will likely grow 6.7 percent this year, unchanged from the actual expansion pace clocked in 2017. Meanwhile, the multilateral lender sees a 6.8 percent growth rate for the country next year.

If realized, the IMF’s forecasts would miss the Philippine government’s 7-8 percent growth target for 2018 until 2022.