Economists lower inflation forecasts

Economists are projecting lower-than-expected inflation rates this year until 2014, citing the likelihood of an extended debt crisis in the eurozone that may continue to dampen global demand.

This was according to the results of the latest Bangko Sentral ng Pilipinas quarterly survey of private sector economists in the country.

According to the BSP, the projections of the economists on price movements were consistent with its own forecasts.

For this year, the economists surveyed slashed their inflation forecast from 3.5 percent to 3.1 percent. For next year, the projection was slashed from 4.1 to 3.6 percent. For 2014, it was cut from 4.2 to 3.6 percent.

The official target for the next two years is 3 to 5 percent.

In the first seven months of this year, inflation averaged 3.1 percent, according to the National Statistics Office.

“The (respondents) attributed the downward adjustment of their inflation forecasts to declining world oil prices. They also consider the ongoing eurozone debt crisis and the continued strengthening of the peso as among the factors that could help temper upward inflationary pressures,” the BSP said in its latest quarterly inflation report, which was published on  Friday.

The respondents to the survey included economists from Banco de Oro, Bank of Commerce, China Bank, Land Bank of the Philippines, Philippine Equity Partners, Rizal Commercial Banking Corp., United Coconut Planters Bank, and multinational financial institutions.

Global oil prices have fallen below year-ago levels as the crisis in the eurozone, the sluggish performance of the US economy, and the economic slowdown in China pulled down global demand for the commodity.

Oil prices in the world market affect inflation in the Philippines because the country imports more than 90 percent of its oil requirements.

Besides oil prices, officials said, prices of certain imported food products had also registered slower increases this year.

The appreciation of the peso was also cited as one of the reasons for the benign inflation in the country.