Inflation expected to average 4.4%

MANILA, Philippines -  Inflation is forecast to average 4.4 percent this year due to sustained increases in food prices and pending adjustments for power rates, economists surveyed by the Bangko Sentral ng Pilipinas said.

In the latest quarterly Inflation Report, the latest projection is higher than the economists’ 4.3 percent estimate published in June.

“Analysts’ expectations of higher inflation in 2014 were due to possible upticks in food prices as a result of tight domestic supply conditions, delays in shipments due to port congestion, pending petitions for adjustments in utility rates, and looming power shortages,” the BSP said.

Last month, Manila City Mayor Joseph Estrada lifted a seven-month long ban on trucks, which has been repeatedly blamed for the delay in the delivery of goods, adding to tight supply conditions and affecting the country’s trade activities.

A total of 28 economists from different banks and organizations were surveyed by the central bank. The lowest full-year forecast was 2.9 percent, while the highest was 4.9 percent.

The BSP has forecast inflation to average 4.5 percent this year, above the midpoint of its three to five percent target range.

BSP Deputy Governor Diwa C. Guinigundo said price pressures remain tilted to the upside, lead by possible further hikes in food prices, as well as pending petitions for adjustments in utility rates and potential power shortages.

Monetary authorities have already raised the key policy rates by a total of 50 basis points this year to ensure inflation will remain within the target bands for this year and the next.

At the same time, the reserve requirement ratios and the special deposit account rate have been hiked to rein in excess liquidity in the domestic financial system.

The next rate-setting meeting has been slated for Oct. 23.

Inflation last year averaged three percent, the low end of the BSP’s three to five percent target range.

Last year marked the fifth consecutive year inflation has settled within the central bank’s target. The BSP is mandated to keep domestic prices stable and ensure such is conducive to sustainable economic growth.