PRIVATE sector economists expect inflation this year to remain subdued mainly due to low global oil prices, results of a survey conducted by Bangko Sentral ng Pilipinas for the month of September show.
The mean inflation forecast this year remained at 1.8 percent relative to June 2016. The average annual inflation forecast for 2017 also stayed at 2.7 percent. Meanwhile, the mean inflation forecast for 2018 fell marginally to 2.8 percent from 2.9 percent in the previous quarter.
“Analysts attributed their subdued inflation expectations to persistently low global oil prices, sub-par global economic growth, and stable food price conditions,” Bangko Sentral said.
“These were seen to outweigh the upside risks brought about by a possible rebound in oil prices, strong domestic demand, possible power rate adjustments, a weaker peso, and the impact of La Niña in the latter part of 2016 until the first quarter of 2017,” the regulator said.
Based on the probability distribution of the forecasts provided by 20 out of 25 respondents, there was a 72.5-percent chance that average inflation for 2016 would settle between the 1.0 percent to 1.99-percent range.
Meanwhile, there was a 25.3-percent chance that the 2016 inflation rate would fall within the 2 to 4 percent target range.
For 2017, respondents assigned a 70.7-percent chance that inflation would fall within the 2 to 4-percent target range.
Results of the September 2016 consensus economics survey showed a lower mean inflation forecast for 2016 at 1.8 percent from 1.9 percent in June 2016. Also, the mean inflation forecast for 2017 was lower at 2.7 percent from 2.9 percent.
Earlier, the policy-making Monetary Board of Bangko Sentral said it was expecting a faster inflation rate in the fourth quarter this year due mainly to higher oil prices.
In the highlights of the latest policy meeting held on Sept. 22 and released Oct. 20, the Monetary Board cited the more vibrant domestic economic activity and the impact of positive base effects as other reasons that would trigger higher inflation in the last three months of 2016.
“Inflation is projected to increase slightly towards the low end of the target range [of 2 to 4 percent] in the fourth quarter of the year, driven by higher oil prices, the above-trend growth in domestic economic activity, and the impact of positive base effects,” it said.
It said latest baseline forecasts showed that average inflation would settle below the low end of the government’s target range of 2 percent to 4 percent for 2016 and rise to near the midpoint of the target range in 2017 and 2018.