Companies expect the inflation rate to remain low in the first half of the year, settling within the target range of 2 percent to 4 percent, according to a survey conducted by the Bangko Sentral ng Pilipinas.
Results of the business expectations survey showed that more respondents expected inflation to decrease in the current quarter.
“Businesses expected that the rate of increase in commodity prices is likely to remain low and within the 2 to 4 percent target range in 2015, at 3.9 percent for both Q1 and Q2 2015 compared to 4.3 percent in the previous quarter’s survey results,” it said.
Bangko Sentral said the findings were consistent with the results of the January 2015 survey of private sector economists which yielded lower mean inflation forecasts for 2015.
Bangko Sentral set an inflation rate target of 2 percent to 4 percent for 2015 until 2018. These targets were lower than the 2014 goal of 3 percent to 5 percent.
Last year, inflation averaged at 4.1 percent, slightly above the mid-point of target range of 3 to 5 percent in 2014.
Inflation rate decelerated to 2.4 percent in January from 2.7 percent in December last year. It was also slower than the 4.2 percent in January 2014 and the slowest since the 2.1 percent in August 2013.
Bangko Sentral Governor Amando Tetangco Jr. said inflation likely accelerated in February from a month ago, due to higher electricity and water rates coupled with the rebound in the prices of oil in the world market.
Tetangco said February inflation likely settled within the range of 2.2 percent to 3 percent, as the higher cost of power and water as well as the recovery in oil prices implied some upward inflation pressures.
Crude prices fell by almost 50 percent in 2014 to less than $50 a barrel, after the Organization of Petroleum Exporting Countries moved to defend market share amid a global glut. Local pump prices also dropped, translating to lower transport fares and cheaper electricity rates.
Power distributor Manila Electric Co. hiked electricity rates by P0.84 per kilowatt-hour in February, translating into an increase of P168 for small households consuming 200 kWh per month. The higher power rates in February came after three consecutive months of price reduction.