The Department of Finance partly blamed the “faulty” forecasting done by some analysts for the elevated inflation expectations this year.
The DoF said in a statement the off-the-mark estimates by some analysts added to the food supply issues during the third quarter and external factors such as rising oil prices for most of 2018.
“On top of food supply issues during the third quarter and external factors such as rising oil prices for most of 2018, inflation was also driven this year by expectations of a faster climb in prices resulting from ‘faulty’ forecasting done by some analysts whose projections were off the mark by as high as plus or minus 0.4 percentage points from the official rates eventually announced by the Philippine Statistics Authority,” Finance Undersecretary Karl Kendrick Chua said.
He said an analysis done by the Department’s Strategy, Economics and Results Group on the inflation forecasts of several economists and analysts from 13 prominent institutions from January to November this year showed that the absolute deviations were as high as 0.4 percentage points, representing an estimated margin of error of around 15 percent. Forecasts with margins of error above 10 percent are considered weak estimates.