The Bangko Sentral ng Pilipinas (BSP) is projecting a 3.7 percent inflation for the month of January, up from December’s 3.5 percent, according to BSP Governor Benjamin E. Diokno.

Citing the Department of Economic Research of the BSP, Diokno said the inflation forecast range is a low of 3.3 percent to a high of 4.1 percent for this month, with a point inflation of 3.7 percent.

“Higher prices for fuel and meat as well as increased Meralco power rates and excise taxes on alcoholic beverages and tobacco contributed to upward price pressures during the month,” according to the DER.

“The could be partly offset by stable rice prices, lower prices selected fish and vegetables as well as the continued appreciation of the peso,” it added.

The BSP said it will “remain watchful of economic and financial developments to ensure the delivery of its primary mandate of price stability conducive to a balanced and sustainable economic growth.”

Based on the latest BSP survey of private economists, the inflation expectation is higher for 2021 but steady for 2022.

Analysts expect inflation for this year to increase to 2.9 percent from 2020’s actual 2.6 percent average. This is a higher forecast from its end-September 2020 estimate of 2.8 percent, but still lower compared to BSP’s own 3.2 percent forecast for 2021.

For 2022, economists still see a mean inflation forecast of a flat three percent which is higher than BSP’s estimate of 2.9 percent.

The BSP and the 24 private sector economists surveyed continue to note that inflation rate will remain manageable for the next two years at least and will likely settle within the two-four percent target.

The BSP said the probability distribution of the forecasts by 20 out of 24 respondents showed a 91 percent chance that inflation will keep within the two-four percent target band in 2021, and 91.5 percent for 2022.

Analysts continue to expect inflation to remain benign in the near term, with risks to the inflation outlook tilted to the upside as the economy gradually reopens.

The survey noted that upside risks to inflation remain as: food supply disruptions due to the recent typhoons and the likely occurrence of weather disturbances in the near term amid La Niña condition; the rebound in oil prices on the possible recovery of demand; higher consumer spending during the holiday season; and the impact of the BSP’s monetary policy actions.

The downside risks are the following: muted domestic demand as consumer confidence remains weak and low purchasing power amid high unemployment rate; strong peso against the US dollar; and the soft global crude oil prices.

FUEL OF THE FUTURE: Energy Secretary Alfonso G. Cusi (seated, center) and Robert Briggs, Senior Advisor to the Executive Chairman of Star Scientific Ltd (seated, rightmost) signed a Memorandum of Understanding (MOU) to explore the potential of hydrogen as one of the country’s energy sources.

Also present during the ceremonial signing were Australian Ambassador to the Philippines Steven J. Robinson AO (seated, leftmost). Behind them (from left to right): Senior Undersecretary Jesus Cristino P. Posadas, Representatives from Star Scientific Ltd. Gilbert Gacrama, Alan Dino, DOE Assistant Secretary Gerardo D. Erguiza, Jr., and DOE Energy Utilization Management Bureau Director Patrick T. Aquino.