BSP: Inflation to slowdown in 2013, but 2014 uptick likely

 

The rise in consumer prices will slowdown further this year, according to the Bangko Sentral ng Pilipinas, but it will pick up pace next year with effects of higher cigarette and liquor prices as well as possible hikes in power costs kicking in.

 

In a briefing Thursday, Bangko Sentral Deputy Governor Diwa Guinigundo said the BSP has cut its inflation forecast to 3 percent from an earlier 3.1 percent.

 

But Guinigundo said the Bangko Sentral sees consumer prices settling at 3.2 percent in 2014, much faster than an earlier forecast of 2.9 percent. 

 

The central bank official said lower forecast for this year was due to benign inflation in the past two months that will carry over in the next months and a strong peso dampening import prices. 

 

“Inflation in November and December has been slower than the forecast, and usually this will have carry over facets in the next months,” he said. 

 

“The exchange rate is also expected to be firm,” Guinigundo added. 

 

However, higher costs of so-called “sin” products as well as power will push inflation faster in 2014. 

 

“The effects of sin taxes will only be felt in 2014. So, the adjustment was also because of that,” Guinigundo said. 

 

“Upward adjustment in power is also seen because of pending petitions to raise costs at Napocor (National Power Corp.),” he added. 

 

Inflation for the whole of 2012 settled at 3.2 percent, which is the exact forecast of the Bangko Sentral for last year

 

The Bangko Sentral targets inflation to settle between 3 to 5 percent this year and the next. -- OMG, GMANews