By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) forecasts inflation rate for the month of October could be a low of 3.2 percent or a high of 3.7 percent compared to the previous month’s 3.4 percent.
While the BSP still expect commodity price index will stay within the government target band of two percent to four percent this year, price hikes and the depreciated peso value affects the inflation path’s upside risks.
“Increases in domestic petroleum prices, electricity rates in Meralco-serviced areas, and water rates in Maynilad- and Manila Water-serviced areas, as well as the weaker peso could contribute to upward price pressures for the month,” according to the BSP’s Department of Economic Research.
In a report earlier this month, the BSP noted that its survey of private economists revised lower their estimate for inflation this year at 3.1 percent from 3.3 percent as they see a balanced price movements despite persistent upside pressures.
The Private Sector Economists Inflation Forecasts survey for the third quarter, indicated that the mean inflation forecasts for 2017 and 2019 were lower compared to what the end-June survey results were. For next year, the mean forecast remained steady.
Economists surveyed now expect 3.1 percent from 3.3 percent in the last tally. For 2018 it was unchanged at 3.4 percent while for 2019, the inflation forecast was reduced to 3.4 percent from 3.5 percent.
“Most analysts expect full year 2017 inflation to remain close to the midpoint of the government’s target range of two percent to four percent amid relatively balanced risks to inflation,” said BSP. The analysts noted possible upside risks to inflation such as volatile global oil prices, weaker peso, initial implementation of the comprehensive tax reform program, government spending on infrastructure, rise in utility rates, robust consumer spending during the holiday season, and base effect. “On the other hand, a key downside risk to inflation was seen to emanate from global economic recovery,” the BSP added.
The central bank forecasts inflation will settle at 3.2 percent for this year and in 2018 as they remain confident that inflation will remain manageable.