Inflation keeps upward momentum
Analysts expect inflation to remain slightly above the upper end of the government’s target range in 2021, with broadly balanced risks surrounding the outlook
Inflation rate’s ascent is expected to resume until the end of this year, a Bangko Sentral ng Pilipinas’ (BSP) survey among economists showed.
“Inflation expectations are higher for 2021 and 2023, while unchanged for 2022,” the BSP said.
“Analysts expect inflation to remain slightly above the upper end of the government’s target range in 2021, with broadly balanced risks surrounding the outlook,” it added.
According to the central bank, inflation outlook from the private sector averaged at 4.3 percent for this year, higher than their previous 4.1 percent projection.
Still, private economists see inflation in the third and fourth quarter period could go by as much as 4.9 and 4.6 percent, respectively.
Upside risks to inflation could emanate from supply disruptions brought by the reimposition of tight lockdowns, adverse weather conditions and persistence of African swine fever, the survey said.
The rising global crude oil prices as well as the peso’s depreciation against the US dollar also accounted for the possible upside risks to the outlook.
On the other hand, downside risks could come from subdued local demand and the prolonged and stricter quarantine measures amid the local transmission of the Delta variant.
Chance to hit target low
The latest BSP survey likewise showed a low chance for the government to hit its inflation target of 2 to 4 percent for the year.
“There is a 17.2 percent probability that average inflation for 2021 will settle within the 2 to 4 percent range, while there is an 82.3 percent chance that inflation will rise above 4 percent,” it said.
“Meanwhile, the probabilities that inflation will fall within the target band in 2022 and 2023 are seen at 84.2 percent and 86.7 percent, respectively,” it quickly added.