By Leslie D. Venzon
MANILA, Oct. 1 (PNA) — British bank Standard Chartered has lowered its inflation forecast for the Philippines this and next year amid a steady downtrend despite risks from the El Nino weather phenomenon.
Bank economist Jeffrey Ng said the country’s inflation rate could average 1.5 percent this year, lower than the previous estimate of 1.9 percent. For 2016, price increases could average 2.7 percent, also down from the earlier forecast of 2.9 percent.
“We believe that inflation will go up higher but will only move up to the BSP (Bangko Sentral ng Pilipinas) target rate even though (there are) some stress on inflation coming from El Nino,” he said in a press briefing.
Ng said inflation rate from January to August recorded month-on-month increase of only 0.1 percent, much lower than past trends.
Downward price pressures in food, energy and oil rates restrained inflation to an all-time low of 0.6 percent in August. This brought the eight-month inflation to 1.7 percent, below the 2 to 4 percent set by the BSP for 2015 and 2016.
He noted that while costs of food particularly vegetable are increasing, rice prices remain stable.
Based on his observed three-year cycle, Ng said he does not expect prices of rice, the main driver of food inflation, to increase this year. The last time the country recorded rice inflation was in 2014, and prior to that in 2011 and in 2007-2008.
The Philippine government is taking steps to ensure enough rice supplies to ensure price stability amid the prospect of a severe El Nino. (PNA)