Private forecasters see 1.7% mean inflation

Private sector economists expect this year’s mean inflation will fall to 1.7 percent, lower than what it predicted in June of 2.5 percent.

The Bangko Sentral ng Pilipinas (BSP), in its latest quarterly inflation report (September), said economists from different banks and non-banks also think that the average annual inflation forecasts for 2016 and 2017 will drop to 2.7 percent from 2.9 percent. The previous estimate (June) was 3.1 percent and three percent, respectively.

“The analysts attributed their lower inflation expectations mainly to lower international and food prices. These are likely to outweigh the upside risks brought by the El Niño phenomenon, the possible (US) Federal Reserve rate hike, increased expenditure from the upcoming election, holiday spending and the normalization of oil prices,” said the BSP.

According to the BSP report, which gathered the opinion of 28 banks and non-banks combined, the probability distributions of the forecasts indicate a 62.8 percent chance that average inflation will likely settle within the one percent to 1.99 percent range for 2015. This is below the two percent to four percent target for the year.

The report also showed a 19.8 percent probability that average inflation for 2015 could still be within the target range. For 2016, the private sector economists predicted a 64.3 percent chance that inflation will fall within the same two to four percent target range.

The central bank cited the September 2015 Consensus Economics Inflation forecast – another data they look at to compare estimates – which indicated a mean inflation estimate of 1.9 percent and 3.2 percent inflation for 2015 and 2016, respectively. Both numbers are lower compared to the previous data’s (June) estimate of 2.4 percent and 3.5 percent.