Private economists see inflation steady at 4.1%

MANILA, Philippines –  Private economists and analysts see inflation steady at 4.1 percent this year and next year amid the recent rally in global commodity prices, a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

Based on the BSP’s Private Sector Economists’ Inflation Forecast, inflation would average at 4.1 percent this year or the same as the previous quarter’s forecast and 4.1 percent next year instead of the previous quarter’s assumption of 4.5 percent.

The respondents see inflation averaging 3.4 percent in the first quarter and 3.7 percent in the second quarter of the year. They also expect inflation to ease to 3.7 percent in 2013.

BSP Assistant Governor Ma. Cyd Tuano-Amador said economists and analysts believe that the continued appreciation of the peso against the dollar would lessen the impact of higher global commodity prices on domestic inflation.

“Analysts noted that while the recent rally in global commodity prices may lead to a pick-up in domestic inflation, the continued appreciation of the peso could temper imported inflation,” she stressed.

The survey showed that the Metrobank Group sees inflation averaging 5.1 percent this year followed by Nomura of Japan with five percent, HSBC with 4.5 percent, Asia ING with 4.2

percent, Deutsche Bank with 4.1 percent, Banco de Oro with four percent, ATR Kim Eng with 3.6 percent, RCBC with a range of between three percent and four percent, and think tank IDEA with 2.6 percent.

For 2012, Metrobank sees inflation at 5.4 percent followed by HSBC with 4.8 percent Asia ING with 4.6 percent, BDO with 4.35 percent, ATR Kim Eng with 4.3 percent, RCBC with a range of between 2.5 percent and 3.5 percent, and IDEA with 2.2 percent.

“Based on the results of the BSP’s survey of private economists for December 2010, inflation is expected to be within the target range for both 2011 and 2012,” Amador added.

According to Amador, the BSP has set an inflation target of three percent to five percent between 2011 and 2014. The central bank stated in its latest forecast that inflation would likely average 3.6 percent this year and three percent next year.

BSP Governor Amando M. Tetangco Jr. earlier said average inflation could kick up to a range of 3.8 percent to 4.2 percent this year if the upside risks to consumer prices materialize resulting in a major build up in inflationary pressures.

“What we are looking at is that if the upside risk materializes, the 3.6 percent might be 3.8 percent to 4.2 percent but still within the midpoint of the target range for 2011,” Tetangco stressed.

Upside risks to inflation include potential upward pressures to commodity prices given sustained demand from emerging markets as well as demand-induced price pressures from a stronger-than-expected domestic economy.

Other risks include cost-side pressures from the likelihood of further adjustments in domestic rice prices and electricity charges as well as the potential price impact of weather disturbance on agricultural production. –Lawrence Agcaoili (The Philippine Star)