Low inflation to linger this year – ADB

“Low oil prices and declining food prices continue to exert downward pressure on inflation in the region,” ADB said.

ADB kept its 6.7 percent projection for Central Asia, but cut its forecast for East Asia to 1.4 percent from 1.7 percent. ADB

Developing Asia, including the Philippines, is expected to continue experiencing a low inflation environment given the weak oil prices and falling food prices, the Asian Development Bank said.

The bank has lowered its 2015 average inflation forecast to 2.5 percent in its latest Asian Development Outlook Supplement from a 2.6 percent estimate last March. has also reduced its estimates for inflation in South Asia to five percent from 5.1 percent and the same for the Pacific to 4.7 percent from five percent.

However, the ADB hiked its 2015 inflation projection for Southeast Asia to 3.4 percent from 3.1 percent given expected rise in the rate in Indonesia and Malaysia.

“In Indonesia, inflation is now expected to reach 6.4 percent in 2015 and 4.9 percent in 2016… reflecting significant additional increases in administered prices,” ADB said.

“In Malaysia, the depreciating ringgit is seen to apply upward pressure on prices to the forecast horizon,” the bank added.

For the Philippines, ADB maintained its 2.8 percent forecast for average inflation this year.

Domestic inflation decelerated to 1.2 percent in June from 1.6 percent in May on lower food prices. This brought the average inflation rate to two percent, which is at the low end of the Bangko Sentral ng Pilipinas’ two to four percent target range.

The central bank has left key policy rates unchanged last month as inflation expectations remain within the target band. The BSP will revisit policy settings next on Aug. 13.