BSP to release new inflation forecast for 2011, 2012 on May 5
MANILA, Philippines—The Bangko Sentral ng Pilipinas is expected to release on Thursday a revised inflation forecast for 2011 and 2012, as higher-than-expected prices of oil and a pending wage hike are seen to push overall domestic prices.
BSP Governor Amando Tetangco Jr. said on Tuesday that previous inflation forecasts for this and next year took into account an assumption that the price of Dubai crude, a benchmark for domestic oil prices, would stay lower than $110 a barrel. Actual price of Dubai crude, however, has been hovering above the $110-a-barrel threshold.
He added that the central bank also used an assumption that the government would approve a P25-hike in daily wages. Wage hike proposals, however, are way above P25.
“In our [previous inflation] forecast, we used [a wage hike] assumption of P25, which marks a 6.2-percent increase. If actual wage hike is bigger than that, then there will be additional inflation implications,” Tetangco told reporters in a chance interview on Tuesday.
Last March, the central bank said its estimates showed that inflation for this year would likely settle “close to 5 percent,” while that for next year would be 3.4 percent.
Both forecasts are within the government’s official target of between 3 and 5 percent.
Nonetheless, Tetangco said the BSP might revise the forecasts to take into account latest developments. He declined to say whether the new inflation forecast for 2011 would be beyond the 5-percent targeted ceiling, but noted that inflation is seen to decelerate in 2012.
“For 2012, inflation is still seen to be closer to the lower end of the target [of 3 to 5 percent]. It will still be below the midpoint [4 percent] of the target range,” he said.
Monetary officials said wage hikes, if not accompanied by a commensurate increase in productivity of workers, would accelerate inflation. This is because an increase in demand that is not matched by an increase in supply would cause prices to rise.
Global oil prices are rising partly because of the political tensions in the Middle East and North Africa (MENA) region, which includes oil-producing countries.
Rising domestic demand, resulting from a growing economy, is also blamed for causing inflationary pressures.
Latest report from the National Statistics Office said inflation stood at 4.3 percent in March, and averaged at 4.1 percent in the first quarter.
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