Economists see faster 2021 inflation rate
Economists are projecting quicker inflation rate this year as risks tilt to the upside, according to a Bangko Sentral ng Pilipinas (BSP) survey.
In its 2020 Fourth Quarter Inflation Report, the central bank said the results of its poll of private sector economists revealed that the mean inflation forecast for 2021 picked up to 2.9 percent from 2.8 percent.
The outlook was faster than the 2.6-percent average in 2020. It is, however, slower than the 3.2 percent forecast of the BSP and falls within the 2.0- to 4.0-percent target of the government.
“Analysts 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 Bangko Sentral highlighted.
It added that the identified upside risks to inflation include: food supply disruptions due to the recent typhoons and the likely occurrence of weather disturbances in the near term amid the 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 central bank’s monetary policy actions.
In the report, the BSP said estimated futures prices of Dubai crude oil in December 2020, which are based on movements in Brent crude oil futures, showed a much higher path for 2021 to 2023 compared to the estimates in September 2020.
Meanwhile, it can be noted that overnight borrowing, lending and deposit rates remain at 2 percent, 1.5 percent and 2.5 percent, respectively, as of December 17.
The Bangko Sentral added that downside risks to inflation are projected to emanate from muted domestic demand as consumer confidence remains weak and low purchasing power amid high unemployment rate; strong peso against the US dollar; and soft global crude oil prices.
For 2020, private sector economists’ mean inflation forecast was unchanged at 3.0 percent, which is higher than the 2.9-percent outlook of the central bank.
The BSP said “the probabilities that inflation will fall within the target band in 2021 and 2022 are seen at 91.0 percent and 91.5 percent, respectively.”