BSP poll bares outlook of slower 2019, 2020 inflation
MANILA, Philippines — Soaring prices in the Philippines are expected to further decline this year and next, according to a central bank poll of private sector economists, strengthening the view that inflation expectations in one of Asia’s fastest-growing economies are starting to ease.
In its 2018 fourth quarter inflation report, the Bangko Sentral ng Pilipinas said its survey of economists last December yielded a mean forecast of 4.1 percent for 2019. If realized, this would settle a tad above the central bank’s 2-4 percent target range, but slower than 5.2 percent full-year inflation chalked up in 2018.
For 2020, private sector economists polled by the BSP pegged inflation at 3.8 percent, well within the government’s target band.
This is “partly because of the sustained downtrend in headline inflation as well as the recent actions of BSP,” central bank director Dennis Lapid said in a press conference Friday.
“We’re now starting to see inflation expectations starting to stabilize and converge towards the target particularly for 2019 and 2020,” Lapid added.
Higher excise taxes on certain commodities, food supply bottlenecks and rising fuel prices pushed up inflation last year, and it spiked to a near-decade high in September and October before it started to cool down.
In a bid to fight capital outflow and keep inflation in check, the Bangko Sentral ng Pilipinas has lifted its policy rate by a cumulative 175 basis points since May 2018.
Red-hot inflation and surging borrowing costs have sapped consumer spending, which has traditionally been the driving force behind growth in the Philippines, and crimped economic growth to a three-year low of 6.1 percent in the third quarter last year.
According to the BSP, inflation in the last three months of 2018 averaged 5.9 percent, softer than 6.2 percent recorded in the preceding quarter due to slower growth in prices of food and non-food items.
Excluding items with volatile price movements, core inflation — often used as an indicator of future inflation — averaged 4.9 percent in the fourth quarter of 2018.
“Domestic demand has remained generally firm even as the monetary policy tightening measures of the BSP has started to work their way through the economy,” Lapid said.
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