El Niño to buoy PHL inflation in 2016 – BSP

The Bangko Sentral ng Pilipinas (BSP) raised its inflation forecast for 2016 to reflect the impact of the El Niño phenomenon on consumer prices.

 

The central bank now expects headline inflation at 2.6 percent on average, compared with 2.5 percent previously, BSP Deputy Governor Diwa Guinigundo told reporters on Thursday.

 

"We do expect that the El Niño will be more serious. Any additional risks from the dry weather conditions related to El Niño would significantly affect the balance of risks," Guinigundo said. 

 

The revised forecast also takes into consideration the depreciation of the local currency amid global uncertainties and volatilities in international financial markets.

 

"We have seen how regional currencies have depreciated. The weakness of the peso could have inflationary implications for 2016 and 2017," Guinigundo said.

 

The BSP expects consumer prices to generally increase by 3.0 percent in 2017. This year, meanwhile, the central bank slashed its forecast to 1.6 percent from 1.8 percent.

 

"We have received reports that the government has already undertaken initiatives to mitigate the expected impact of the El Niño particularly on fisheries, livestock and poultry and on some crops," Guinigundo said.

 

The headline inflation stands at 1.7 percent as of in the eight months to August – below the central bank's 2 percent to 4 percent target this year and 2016. – VS, GMA News