PHILIPPINE STAR - May 11, 2009

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Economists lower inflation forecast to 4% this year

MANILA, Philippines - Economists have lowered their projected average inflation rate for this year from 4.5 percent to four percent, falling within the government’s official target inflation of 3.5 to 5.5 percent.

The Bangko Sentral ng Pilipinas (BSP) conducted a survey among private sector economists and analysts in the first quarter of the year and the resuls showed that inflation expectations have improved.

Based on its survey of non-government analysts and economists, the BSP said the mean inflation forecast for 2009 was four percent, lower than the 4.5-percent forecast in the survey three months previously.

The BSP said its survey indicated an average forecast inflation rate of 3.9 percent in the second quarter and 1.7 percent in the third quarter.

For 2010, the BSP said the average inflation forecast was relatively stable at 4.9 percent (from 4.8 percent a quarter ago).

“Inflationary pressures are expected to be dampened by soft global commodity prices owing to the severe economic slowdown and continued lack of demand-pull pressures,” the BSP said.

According to the BSP, most economists expect strong base effects from very high consumer price index (CPI) levels in 2008 when the average rate peaked at over 12 percent in the third quarter.