Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said inflation for the month of April could go as high as five percent from 4.5 percent in March, but could also be a low of 4.2 percent based on downside pressures.
The BSP’s forecast range of 4.2 percent to 5.0 percent for April is still consistent with its full-year average projection of 4.2 percent.
Diokno, citing the BSP Department of Economic Research report on consumer price index, said that “lower prices of domestic petroleum products and key food items, such as fruits and vegetables due to improved supply conditions, are the main sources of downside price pressures during the month.”
“However, these could be partly offset by upward adjustment in Meralco electricity rates, coupled with higher prices of pork, fish, and rice,” he said.
The BSP’s latest Private Sector Economists’ Inflation Forecasts has a higher 2021 projection of 4.3 percent versus its previous forecast of 3.9 percent made in February. It’s also higher than BSP’s own 4.2 percent forecast for this year.
The BSP’s inflation outlook is that from the first quarter to the third quarter this year, inflation rate will accelerate above the two-four percent target due to the transitory impact of supply-side price pressures. By end-2021 until the first quarter next year, it expects inflation to decelerate below the midpoint of the target range before settling near the three-percent level by the second half of 2022 with the moderation of global oil and non-oil prices.
According to the survey, analysts expect upside risks to inflation will come from the following: supply disruptions brought about by adverse weather conditions and African Swine Fever; rising global crude oil prices, which could push up transportation costs; and higher government spending, renewed consumer demand, and normalization of business operations.
The survey also took into account the rollout of vaccines, low interest rate environment, and base effects as factors for the latest economists’ forecasts.
The BSP said downside risks to inflation are subdued domestic demand due to low purchasing power and implementation of localized lockdown measures amid the recent spike in new COVID-19 cases, which could slow the pace of economic recovery.