PHL lowers 2013 inflation forecast to 3.1% from 3.9%

The Philippines on Thursday lowered its inflation forecast to 3.1 percent for 2013 from an earlier projection of 3.9 percent, the Bangko Sentral ng Pilipinas reported, following the last policy-setting meeting of its Monetary Board for the year. The inflation forecast was also revised to 3.2 percent for this year from an earlier projection of 3.3 percent.

 

In a media briefing, Bangko Sentral Governor Amando Tetangco Jr. said “favorable trends in the structure of inflation and expected higher capacity of the economy for growth under a low inflation environment” prompted the lowering of inflation targets in the next two years.

 

The central bank sees a slower rise in consumer prices at 3.1 percent in 2013 from an earlier projection of 3.9 percent, Bangko Sentral Deputy Governor Diwa Guinigundo told reporters in the same briefing.

 

For 2014, Guinigundo said the inflation forecast was pegged at 2.9 percent from 3.1 percent.

 

The expected increases in the MRT and LRT fares, jeepney fare, National Food Authority rice prices, and wages were already taken into account in revising the inflation numbers.

 

“The inflation path is now seen a little lower, but interest rates were on hold because economic activity is robust. So, there is no need for further easing,” Guinigundo said, referring to benchmark rates which monetary authorities tweak to curb spikes in consumer prices.  

 

Guinigundo also noted the economy is also showing signs that it can absorb high growth, allowing a low inflation environment. 

 

“There are initial signs that absorptive capacity has improved,” he said, explaining why the government sees higher growth amid low inflation.  

 

The economy expanded by a surprising 7.1 percent in the third quarter, while inflation slowed to 2.8 percent in November. 

 

The Bangko Sentral still targets 3 percent to 5 percent inflation for this year and the next. It, however, lowered its inflation target to 2 percent to 4 percent for 2015 and 2016. 

 

“The government decided to reduce the medium-term inflation target… for 2015 to 2016 to be consistent with the desired disinflation path over the medium-term,” Tetangco said.  — VS, GMA News