Economists expect 4.1% inflation for 2019 – BSP
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Sun, 20 Jan 2019 16:19:01 +0000
ECONOMISTS see inflation settling at 4.1 percent this year, the Bangko Sentral ng Pilipinas (BSP) said, higher than its 3.1-percent full-year forecast but still within the 2.0-4.0 percent target.
“While analysts expect inflation to remain elevated in the near term, their assessment of the balance of risks to the inflation outlook has shifted toward the downside,” the central bank also said in its recently-released Fourth Quarter Inflation Report.
It said that possible downside risks included declining global oil prices, easing prices of food and non-food items that seemed to have stabilized, implementation of mitigating measures to address domestic food supply issues, expectations of further policy rate hike, and the recovery of the Philippine peso against the US dollar.
Estimated futures prices of Dubai crude as of end-December 2018 showed a lower path for 2019-2022 compared to forecasts during the previous quarter, the report noted.
Food inflation moderated to 7.7 percent while non-food inflation also eased to 3.9 percent in the same period, it added.
“Food inflation could subside over the near term due to the implementation of non-monetary measures to ease import requirements,” the BSP said, adding that the impending passage of the rice tariffication law could further contribute to downward price pressures.
The report also pointed out that the peso averaged slightly appreciated to P53.26:$1 in the fourth quarter from the previous quarter’s P53.54:$1.
Key upside risks are expected to emanate from potential volatile global oil prices, possible depreciation of the peso, increased demand due to upcoming school enrollment and during the holiday season, geopolitical risks, and an expected rise in transport fares and utility rates.
Based on the probability distribution of forecasts by 23 out of the 27 respondents, the Bangko Sentral said there was an 44.8-percent chance that average inflation would fall within the 2.0-4.0 percent target.
For 2020, meanwhile, economists had a mean inflation forecast of 3.8 percent, also higher than the BSP’s 3-percent estimate.
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