Economists expect 2016 inflation at 1.8%, lower than govt target

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ECONOMISTS from the private sector were expecting that the average inflation rate this year will fall below the government’s target range of 2 to 4 percent, the Bangko Sentral ng Pilipinas said.

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Surveyed last September, the economists cited stable food prices, among others, for their mean inflation forecast of 1.8 percent, unchanged relative to the results in June 2016 survey, the BSP noted in its Third Quarter Inflation Report released Friday.

The forecast is slightly higher than the central bank’s latest estimate of 1.7 percent for the year.

For 2017, the economists gave an average inflation forecast of 2.7 percent, unchanged but lower the 2.9 percent of the BSP.

However, their forecast for 2018 at 2.8 percent was higher than the 2.6 percent of the BSP.

Based on the probability distribution of the forecasts by 20 out of the 25 respondents, the survey noted a 72.5 percent chance that the average inflation for 2016 will settle between 1 percent and 1.99 percent.

On the other hand, the respondents placed a 25.3 percent chance that inflation this year will fall within the 2 percent to 4 percent target range.

“Analysts attributed their subdued inflation expectations to persistently low global oil prices, sub-par global economic growth, and stable food price conditions,” the central bank said.

According to the respondents, those factors will outweigh the upside risks from a possible rebound in oil prices, strong domestic demand, possible power rate adjustments, a weaker peso, and the impact of La Niña in the latter part of 2016 until the first quarter of 2017.

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