• Economists’ 2017 inflation forecasts in line with BSP target

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    ECONOMISTS from the private sector expect the average inflation rate will settle within the 2 percent- to-4 percent government target this year, the Bangko Sentral ng Pilipinas (BSP) said in a recently released survey.

    Surveyed last December 2016, the economists cited a weaker peso, higher global oil prices, robust domestic demand and higher probability of further Fed rate hikes for their mean inflation forecast of 3 percent from 2.7 percent, the BSP noted in its Fourth Quarter Inflation Report released Friday.

    The forecast is slightly lower than the central bank’s latest estimate of 3.3 percent for 2017.

    “The increase in the mean inflation forecast was also driven by the recent uptick in domestic fuel prices and its impact on housing and transport inflation as well as possible effects on prices of the proposed tax reform measures, along with higher government spending,” according to the inflation report.

    These factors are to outweigh the downside risks from by the slowdown of the Chinese economy and the yuan devaluation, as well as the risk of recession and deflation in Japan and the Eurozone, the BSP said.

    Based on the probability distribution of the forecasts by 21 out of the 26 respondents, the survey noted a 77.1 percent chance that the average inflation for 2017 will fall within the 2 percent-to-4 percent range.

    For 2018, the economists gave a mean inflation forecast of 3.1 percent from 2.8 percent in the previous survey and higher than the 3 percent of the BSP.

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