RISKS that inflation will breach the government's official target this year of 3 to 5 percent may force the Bangko Sentral ng Pilipinas--the Philippine central bank--to raise interest rates by the end of the first half.

This was according to investment bank DBS, which said an inflation of beyond 5 percent this year would be likely as faster increase in the cost of food and oil products could lead to an overall hike in consumer prices.

"As prices rise, the BSP will also be reluctant to cut interest rates, and risks are that it may in fact consider raising interest rates," DBS said in a paper on the local economy.

Also, personal consumption is still seen to be strong this year, DBS said. Together with rising oil prices, growth in consumption would support faster inflation this year.