BSP: Poll forecasts 5.3% inflation

ECONOMISTS polled by the Bangko Sentral ng Pilipinas (BSP) expect inflation to hit an above-target 5.3 percent this year before decelerating over in 2019 and 2020.

“The survey on private sector economists for September 2018 showed that the mean inflation forecast for 2018 rose to 5.3 percent from 4.5 percent in the June 2018 survey,” the central bank said in its recently released third quarter inflation report.

The mean inflation forecasts for 2019 and 2020 also increased to 4.3 percent and 3.9 percent, respectively, from 3.8 percent in the previous survey round.

“Based on the probability distribution of the forecasts provided by 24 out of 28 respondents, there is a 0.5‐percent probability that average inflation for 2018 will settle between the 2‐4 percent target range, while there was a 99.5‐percent chance that inflation will rise beyond 4 percent,” the BSP said.

For 2019, meanwhile, survey responses led to a 30.2‐percent probability that inflation would fall within the 2‐4 percent target range and 69.5 percent chance that it would continued to breach the upper end of the target.

Analysts noted that risks to 2018 consumer price growth remained tilted to the upside, the Bangko Sentral bank added.

These risks include the following:

• higher and volatile global oil prices;

• impact of the implementation of Tax Reform for Acceleration and Inclusion ( Train) law on prices of domestic goods;

• weakening peso;

• higher prices of food and other commodities due to adverse weather conditions and supply shortages;

• higher utility rates;

• wages and transport fare hikes;

• strong domestic demand during the holiday season and the 2019 mid-term elections;

• delays in the implementation of the government’s mitigating measures against rising inflation;

• higher state infrastructure spending;

• global trade war; and

• higher inflation expectations. Estimated futures prices of Dubai