BSP says inflation to remain benign

The movement of consumer prices will likely stay subdued for the next two years as the costs of key commodities such as food in the international market may stay low due to weak economic conditions abroad. AFP FILE PHOTO

MANILA, Philippines—The movement of consumer prices will likely stay subdued for the next two years as the costs of key commodities such as food and fuel in the international market may stay low due to weak economic conditions abroad.

Private sector economists surveyed by the Bangko Sentral ng Pilipinas (BSP) said inflation would likely stay below 3 percent this year, and below 4 percent in 2014 and 2015, in line with the central bank’s own forecasts.

“Results of the BSP’s survey of private economists for September 2013 yielded generally lower but still broadly within-target inflation forecasts for 2013 to 2015,” the BSP said in its quarterly inflation report.

In particular, the BSP said, the mean inflation forecasts of economists for 2013 and 2014 went down to 2.9 percent from 3.1 percent, and 3.5 percent from 3.6 percent, respectively.

Meanwhile, the inflation forecast for 2015 was steady at 3.6 percent. Inflation from the start of the year to October averaged at 2.8 percent, slightly lower than the BSP’s official target of 3 to 5 percent.

The BSP’s latest inflation forecast show that prices may rise by an average of 3 percent by the end of the year, before accelerating to 4 percent in 2014.

While a slight bump in food prices may be felt in Visayas due to the damage to farmlands caused by supertyphoon “Yolanda,” the BSP still expects inflation to average slightly below the target set for the year.

Last week, BSP Deputy Governor Diwa C. Guinigundo said prices of select commodities such as corn, vegetables, and meat in Eastern Visayas could rise due to a tightness in supply.

Based on the forecasts submitted by economists, there was a 68.2 percent chance that average inflation for 2013 could settle between 2.1 and 3 percent, the BSP said.