New inflation forecasts likely

INFLATION FORECASTS for this year and the next will likely be revised next month, a senior Bangko Sentral ng Pilipinas (BSP) official said, given the suspension of a hefty Manila Electric Co. (Meralco) rate increase.

“Given the postponed rate hikes of Meralco, our inflation forecasts of 4.5% for 2014 and 3.2% for 2015 will have to change,” central bank Deputy Governor Diwa C. Guinigundo said on Friday.

The Monetary Board — the BSP’s policymaking body — is scheduled to hold its first policy meeting for the year on Feb. 6. During its final 2013 meeting last Dec. 12, it raised the 2014 inflation forecast from 4%. The outlook for 2015, meanwhile, was trimmed from 3.4%.

“The 2014 forecast was increased because of higher oil prices, power adjustments and the impact of the [super typhoon Yolanda] disaster,” Mr. Guinigundo then said, adding that the rise in consumer prices is seen to normalize in 2015 — hence the lowered forecast for that year.

Before the year ended, however, the Supreme Court issued a restraining order on a P4.15 per kilowatt-hour rate hike that Meralco was supposed to have begun implemented in December. The adjustment was supposed to be completed with two more increases in February in March.

Given the deferred rate hikes, Mr. Guinigundo last week said “the inflation outlook for this year will likely be lower,” declining to be more specific.

Inflation averaged 3% last year, just above the BSP’s 2.9% forecast and at the low end of the 3-5% target. The 3-5% goal has been carried over for this year, while that for 2015 is a lower 2-4%. — A. R. R. Gregorio, BUsinessworld