Private sector economists see inflation further slowing down this year and in 2020 on the back of a more stable food supply and lower global crude oil prices, according to the results of the Bangko Sentral ng Pilipinas survey conducted in March 2019 and released over the weekend.
Relative to the December 2018 survey results, the mean inflation forecast for 2019 decreased to 3.3 percent from 4.1 percent, while the mean inflation forecast for 2020 fell to 3.4 percent from 3.8 percent.
Meanwhile, the mean inflation forecast for 2021 stood at 3.4 percent.
“Analysts expect inflation in 2019 and 2020 to settle within the target range, with downward pressures seen to dominate the risks to the inflation outlook,” Bangko Sentral said.
“Possible downside risks to inflation include the implementation of the rice tariffication law, which is expected to improve domestic rice supply and stabilize prices, and lower global crude oil prices,” the regulator said.
Key upside risks to inflation, meanwhile, are seen to come from adverse weather conditions such as El Nino, volatile global oil prices and foreign exchange market, possible policy rate cut by the central bank, higher domestic demand due to the upcoming midterm elections and school enrollment, and higher electricity rates.
Based on the probability distribution of the forecasts provided by 21 out of 26 respondents, there is an 81-percent probability that the average inflation for 2019 will settle between the 2-percent to 4-percent target range, while there is a 16.1-percent chance that inflation will rise beyond 4 percent.
For 2020, respondents assigned a 79.8-percent chance that inflation will fall within the 2-4 percent target range and 17-percent chance that inflation will breach the upper limit of the target.
Inflation in March this year further eased to a 15-month low of 3.3 percent from 3.8 percent a month ago due to slower annual increases in the prices of food and non-alcoholic beverages.