Economists expect inflation to accelerate this year and next, on weaker peso, higher global oil prices and the increased probability of further interest rate hikes by the US Federal Reserve.
Results of the December 2016 consensus economics survey conducted by Bangko Sentral ng Pilipinas showed that respondents were expecting the average annual inflation for 2017 and 2018 to go up to 3 percent from 2.7 percent and 3.1 percent from 2.8 percent, respectively.
“Analysts attributed their higher inflation expectations to a weaker peso, higher global oil prices, robust domestic demand and increased probability of further Fed rate hikes,” Bangko Sentral said.
“The increase in the mean inflation forecast was also driven by the recent uptick in domestic fuel prices and its impact on housing and transport inflation as well as possible effects on prices of the proposed tax reform measures, along with higher government spending,” it said.
The regulator said these were seen to outweigh the downside risks brought by the slowdown of the Chinese economy and the yuan devaluation, as well as the risk of recession and deflation in Japan and the Eurozone.