Experts see no threat from inflation

Bangko Sentral ng Pilipinas. INQUIRER.net FILE PHOTO

PRIVATE sector analysts expect consumer inflation to remain stable in the next three years, reflecting the improvement of the domestic economy as it becomes more insulated from price swings.

Results of the Bangko Sentral ng Pilipinas’ (BSP) latest survey of private sector economists showed a decline in mean inflation forecasts for up to 2017.

For 2015, consumer price inflation is expected to average at 2.7 percent, which is below the midpoint of the central bank’s target of 2 to 4 percent.

“The analysts attributed their lower inflation expectations mainly to the decline of international oil prices, which led to the reduction in … jeepney fares and flag-down rate of taxis for the entire country,” the BSP said in a report released over the weekend.

A total of 28 banks and think tanks were surveyed in March.

BSP Deputy Governor Diwa C. Guinigundo said the improvements in the economy’s capability to produce more goods for consumption would help keep prices stable.

This development is a result of higher levels of investment made by both the government and private sector.

The BSP’s main goal is to protect the public’s purchasing power by keeping prices stable. This is done through adjustments in interest rates, and the management of the amount of cash circulating in the economy.

The mean inflation forecast for 2015 was lower than the 3.6 percent of December 2014, the last time the survey was conducted.

Similarly, the mean inflation forecast for 2016 declined to 3.3 percent, from 3.7 percent. The inflation forecast for 2017 was 3.3 percent.

The regulator likewise said there was a strong chance that the average rise in consumer prices could settle within the range of 2.1 to 3 percent range.

Also, there was a 29.4-percent probability that average inflation for 2015 could fall within 3.1 to 4.0 percent, the BSP said.

In the first quarter of 2015, inflation averaged 2.4 percent. For April, the BSP expects inflation to fall within a range of 1.9 and 2.8 percent, while for the entire year, it is projected to average 2.3 percent.

This means that inflation may slow down later this year.