By Kris M. Crismundo
MANILA, Oct. 5 (PNA) — Analysts have projected a slight acceleration in inflation for the full year of 2014, according to the Bangko Sentral ng Pilipinas (BSP) Private Sector Economists’ Survey.
The BSP Survey states that the business community is expecting 4.4 percent inflation rate by end-2014, slightly higher than the forecast of 4.3 percent in the same survey in June.
“Analysts’ expectations of higher inflation in 2014 were due to possible upticks in food prices as a result of tight domestic supply conditions, delays in shipments due to port congestion, pending petitions for adjustments in utility rates, and looming power shortages,” the central bank explained.
The same inflation rate is also expected for the fourth quarter of the year.
To recall, BSP data showed that for the first quarter of 2014, headline inflation was at 4.1 percent. It further grew to 4.4 percent in the second quarter and accelerated anew to 4.6 percent in July-August period.
The Philippine Statistics Authority (PSA) will disclose the September inflation rate by Tuesday (Oct.7).
Inflation rate peaked during July and August with the same inflation rate of 4.9 percent.
But inflation rates from January to August were within the Development Budget Coordination Committee’s target of 3.0 to 5.0 percent by end-2014.
Meanwhile, the private sector maintained its inflation forecasts for 2015 and 2016 with rates of 4.0 percent and 3.9 percent, respectively.
For the central bank’s part, it noted that “latest forecasts indicate that average inflation could settle above the midpoint of the respective target ranges for 2014 and 2015 before easing slightly in 2016.”
“Upside pressures could emanate from possible rise in food prices and power rates along with the potential power shortages,” the BSP said.
In particular, BSP cited that potential increase in food prices can be attributed to tight supply conditions and delays in shipments due to port congestion.
“The congestion at Manila port raises the cost of production via higher port and transport charges. The increase in production costs as well as ‘artificial shortage’ due to delay of shipment deliveries could eventually be reflected as higher consumer prices,” the central bank explained.
The BSP added that the pending petitions for adjustments in utility rates and the potential power shortage in the summer of 2015 are risks to higher inflation.
“Insufficient supply implies higher electricity prices,” the BSP pointed out. “These could lead to higher production costs as well as manufacturing delays and could therefore cause inflationary pressures.”
But the central bank assures that it will closely look and guard against the potential buildup of consumer prices through policy actions.
“The BSP will continue to keep a close eye on the evolving balance of risks to our inflation outlook and to the financial system, and we stand ready to use all available tools in our arsenal as needed to safeguard our price and financial stability objectives,” BSP Assistant Governor for Monetary Policy Ma. Cyd N. Tuaño-Amador stated. (PNA)