Inflation seen easing further this year

MANILA, Philippines - Inflation is expected to ease further this year and the next due to the continued drop in global oil prices, analysts surveyed by the Bangko Sentral ng Pilipinas said.

The nationwide inflation rate is seen averaging 3.6 percent this year, down from the previous estimate of four percent, the central bank said in a report. For next year, the survey indicated a  3.7 percent average, or lower than the previous target of 3.9 percent.

 “The analysts attributed their lower inflation expectations mainly to the softening of international oil prices,” the BSP said. Both estimates are well-within the central bank’s two to four percent target for both years.

Twenty-seven economists from different banks and organizations were surveyed by the central bank as part of its quarterly inflation report.

The lowest projection for this year’s average inflation is 2.8 percent, while the highest is 4.1 percent. For 2016, the lowest estimate for the average inflation is 2.8 percent, while the highest is 4.8 percent.

Inflation averaged 4.1 percent last year, near the midpoint of the three to five percent goal during the period. This marked the sixth consecutive year inflation fell within the BSP’s target range.

The rate peaked between May and August last year but improvement in the supply conditions and the successive cuts in pump prices helped keep the rate within the range.

Latest available data showed Asian benchmark Dubai crude has averaged $62.56 per barrel in December last year, below the $107.81-per-barrel average in June 2014 and the $103.99-per-barrel average back in January 2014.

Monetary authorities during its last two rate-setting meetings in 2014 kept the overnight borrowing and overnight lending rates steady as inflation expectations remain within the target ranges until 2016.

The central bank in December even lowered its forecast for average inflation this year to three percent from 3.7 percent and the estimate for next year to 2.6 percent from 2.8 percent.

BSP Deputy Governor Diwa C. Guinigundo earlier this month said the rate could average even below the three percent projection if global oil prices continue to decline.

He, however, stressed uncertainty remains on which direction the trend for oil prices will go, tagging it as a risk for domestic inflation if it suddenly starts increasing the same pace it fell last year.