PRIVATE economists in the country remain wary about the country’s inflation path in 2019, as the latest results of the Bangko Sentral ng Pilipinas’s (BSP) survey of bank analysts show a still slightly elevated inflation projection for the year.
In its quarterly report on local inflation developments, the Central Bank said its survey of private bank economists across the country yielded a mean inflation forecast of 4.1 percent for 2019. While this is lower than the earlier projection of 4.3 percent for the year, it still breaches the BSP’s target range of 2 to 4 percent for the year.
In particular, respondent banks during the period assigned a 44.8-percent probability that inflation will fall within the 2 to 4 percent target range, and a 53.6-percent chance that inflation will breach the upper end of the target.
The BSP’s survey of private economists had 27 bank economists in the country and was conducted between December 7 and 10 of last year. This means that their forecast has not yet been influenced by the latest inflation print for December 2018, which was released by the Philippine Statistics Authority (PSA) in the first week of January.
The BSP said that while analysts expect inflation to still remain elevated in the near term, their assessment of the balance of risks to the inflation outlook has shifted toward the downside.
Among the possible downside risks to inflation—or developments that could push inflation further downward—include lower-than-expected global oil prices, further decline of food and nonfood items and the potential implementation of mitigating measures to address food-supply issues, such as rice importation.
Upside risks
However, upside risks are also seen. Among them: the volatility of global oil prices which could lead to a surprise tick-up in petroleum costs worldwide, the possible depreciation of the peso and the rise of geopolitical risks such as trade tensions between China and the United States.
For 2020, private economists’ average forecast for inflation also declined from 3.9 percent in the previous survey round to 3.8 percent in the December 2018 survey. The BSP’s target range for that year is also at 2 to 4 percent.
Latest data show inflation averaged at 5.2 percent in 2018, breaching the 2-4 percent target range for that year. The peak inflation came at September and October of last year to hit 6.7 percent, before coming down to 5 percent in November. Inflation then posted a sharp drop to 5.1 percent in December.