MANILA, Sept. 24 (PNA) — Monetary officials on Thursday cut anew their average inflation forecast for the Philippines for 2015-16 given the continued drop of oil prices, which is affecting prices of other commodities.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said this year’s projection was slashed to 1.6 percent from 1.8 percent last August.
However, next year’s figure was moved to 2.6 percent from 2.5 percent due to expected uptick in inflation rate because of the dry season. For 2017, inflation is seen to average at three percent.
The dry season has not affected supply conditions in the country, thus, commodity prices remain low.
As of last August, inflation averaged at 1.7 percent. Inflation has been below-target since last May after it fell to decades-low 1.6 percent.
However, Guinigundo said the worst is yet to come as the El Nino phenomenon is expected to be experienced until June 2016.
“Any additional risks from the dry weather conditions related to El Nino would significantly affect the balance of risks,” he said.
The central bank official also said that depreciation of the peso, caused partly by external developments, is seen to contribute to inflationary pressures.
“The weakness in the peso have inflationary implications for 2016 and 2017,” he added.
Monetary officials maintain that amidst the weakening of Asian currencies the peso’s performance remain in the middle buoyed by the strong domestic fundamentals.
On Thursday, the peso closed sideways to the dollar at PhP46.85. (PNA)