Despite the expected impact of the damages brought by Super Typhoon Yolanda in consumer prices, a local think tank said that the full-year inflation rate could still be well within the target band of the Bangko Sentral ng Pilipinas (BSP).
In the latest issue of The Market Call, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said that the inflation rate will certainly rise in the fourth quarter of the year, after averaging 2.4 percent in the previous quarter on the face of the slower pace in the rise of crude oil prices.
“This will certainly rise in Q4 [fourth quarter], exacerbated by the super typhoon’s effects in the Visayas,” it stated.
However, the think tank noted that steady to lower crude oil prices would pull down inflation to 3.3 percent in the last quarter.
With the lower inflation in the fourth quarter, FMIC and UA&P said that full-year inflation could be at 3 percent or at the low end of the 3-percent to 5-percent BSP target.
The think tank’s inflation outlook was lower compared to the latest forecast of the central bank. Considering the effects of Yolanda in the supply of consumer goods, the BSP had raised its inflation rate forecast in 2013 and 2014.
BSP saw average inflation rate for 2013 at 3.2 percent from a previous forecast of 3 percent, while inflation in 2014 could be as high as 4.5 percent from its previous estimate of 3.9 percent.
Meanwhile, the think tank also said that overseas Filipino workers remittances will be a positive factor for the economy in the second half of 2013.
Latest data from the BSP said that personal remittances from overseas Filipinos continued to grow at a solid pace.
Remittances in September rose by 6.8 percent year-on-year to reach $2.1 billion, the sixth consecutive month in 2013 that personal remittances exceeded $2 billion.
Cumulative personal remittances for the nine-month period increased to $18.2 billion, 6.6 percent higher than the level posted during the same period in 2012.