Faster rise in consumer prices seen by economists

MANILA, Philippines — Economists are now expecting a faster rise in consumer prices this year before easing over the next two years, according to a survey conducted by the Bangko Sentral ng Pilipinas.

BSP managing director Zeno Ronald Abenoja said the results of the central bank’s survey of private sector economists for February showed a slight increase in the mean inflation forecast for 2022 to 3.5 percent from 3.4 percent in the January survey.

“Analysts expect inflation to settle within the government’s target range in 2022, with broadly balanced risks surrounding the outlook,” Abenoja said.

Abenoja said that 76.4 percent of the 22 respondents of the survey conducted from Feb. 4 to 10 this year believe that inflation would fall within the BSP’s two to four percent target this year, while there is a 23.3 percent chance that the consumer price index (CPI) would exceed the range.

State-run Land Bank of the Philippines sees inflation exceeding the government target and averaging 4.2 percent this year, followed by Robinsons Bank and Al Amanah Islamic Bank (four percent), Bank of Commerce (3.94 percent), New York-based Global Source Partners (3.8 percent), Rizal Commercial Banking Corp. (3.7 percent) and BDO (3.57 percent).

Standard Chartered Bank and Maybank have the lowest inflation forecast for this year at three percent, followed by UBS with 3.1 percent.

However, Abenoja said economists are expecting inflation to ease to 3.1 instead of 3.2 percent for 2023 and to 2.9 instead of 3.3 percent for 2024.

According to the respondents, inflation is expected to ease and settle close to the midpoint of the target over the policy horizon.

Abenoja said the probabilities that inflation would fall within the target band in 2023 and 2024 are seen at 88.4 percent and 80.7 percent, respectively.

He pointed out that most of the analysts are expecting the BSP to end its accommodative stance and raise the reverse repurchase rate by 25 basis points to 125 basis points between 2022 and 2024.

According to Abenoja, economists said that the upside risks to inflation include persistently high global oil prices, which could result in higher transport costs, as well as supply chain disruptions due to lingering concerns over the COVID-19 Omicron variant, the after-effects of Typhoon Odette and possible occurrence of other weather disturbances.

Analysts, he said, foresee the normalization of economic activities and easing of mobility restrictions, election-related spending and higher energy prices putting more pressure on consumer prices.

The BSP raised its 2022 inflation forecasts to 3.7 percent from the original target of 3.4 percent and to 3.3 from 3.2 percent for next year due to higher global crude prices as well as non-oil prices.