Inflation seen easing further this year

MANILA, Philippines – Inflation is expected to ease further this year due to lower oil and food prices, economists surveyed by the Bangko Sentral ng Pilipinas said.

“Inflation expectations – as measured in forecast surveys for January – were lower compared to the previous month and aligned to the inflation target,” the central bank said in a report.

Economists surveyed by the BSP said they expect inflation to average 3.1 percent this year, below their 3.6-percent projection in December. For next year, the rate has been forecast to accelerate to 3.4 percent, also lower than the earlier estimate of 3.7 percent.

Both projections are within the government’s two-to four-percent target for inflation in both years.

The central bank last month cut its forecasts for average inflation this year and the next on lower oil prices and weaker activity in the global economy.

The BSP expects inflation to average 2.3 percent this year from a previous estimate of three percent. For next year, the rate has been projected to average 2.5 percent from the previous target of 2.6 percent.

Inflation climbed to 2.5 percent in February from an 18-month low of 2.4 percent in January on higher oil and other utility prices. The 2.4-percent average during the first two months of the year remain well-within the government’s target range.

BSP Governor Amando M. Tetangco Jr., following the release of February inflation data, said the stance of policy “remains appropriate at this time.”

However, he stressed the BSP continues to monitor global developments especially the trends in oil prices and how would this impact on domestic inflation.

The central bank last month left its key policy rates unchanged as inflation expectations fell within the target range for this year until 2016.

Last year, the rates were raised by a total of 50 basis points to anchor inflation and ensure it continues to be supportive of domestic economic growth.

The next rate-setting meeting has been slated for March 26.