Private economists in the country are seeing a higher inflation rate this year, a recent Bangko Sentral ng Pilipinas (BSP) survey showed, with the impending power rate hike sought by the Manila Electric Co. cited as one of the factors.
“Results of the BSP’s survey of private sector economists for December 2013 yielded generally higher but still broadly within-target inflation forecasts for 2013 to 2015,” the central bank stated in its 2013 Fourth Quarter Inflation Report.
According to the September 2013 Consensus Economics inflation forecast survey, the mean inflation forecasts for this year went up to 3.9 percent from 3.5 percent, while the inflation forecast for 2015 was steady at 3.6 percent.
The BSP noted that based on the probability distribution of the forecasts provided by the respondents, there is a 34.2-percent chance that average inflation for 2013 could be within 3.1 percent to 4 percent.
Average inflation rate for the year settled at 3 percent and remained within the government’s 2013 inflation target range of 3 percent to 5 percent.
For this year, the BSP hiked its inflation rate outlook to 4.5 percent, and 3.2 percent for 2015, still within its 3-percent to 5-percent target band.
In the report, the BSP said that the balance of risks to the inflation outlook remained tilted toward the upside, because of the potential increases in food prices as well as the pending petitions for further adjustments in power rates.
“The recent domestic calamities as well as possible increase in electricity rates due to the shutdown of the Malampaya power plant are the major factors seen to contribute to higher inflation in 2014,” it stated.
The BSP noted that agricultural damage from Typhoon Santi was recorded at P3.2 billion and from Super Typhoon Yolanda at P18.4 billion. Damage to infrastructure is estimated at P100 million and P18.3 billion for Santi and Yolanda, respectively.
“The lower agricultural production and resulting supply bottlenecks due to damage to infrastructure could fuel some temporary upside pressures on food prices,” it added.
Meanwhile, generation rates increased as some of Meralco’s power plants implemented maintenance shutdowns. On December 23, 2013, the Supreme Court, however, issued a 60-day temporary restraining order, to defer the implementation of the electricity hike.
“Thus, utility rate adjustments represent upside risk to inflation forecasts,” the central bank said.