MANILA – Sliding international oil prices have led to lower inflation forecasts by private-sector economists.
Citing its latest survey of private-sector economists, the Bangko Sentral ng Pilipinas (BSP) said the mean inflation forecast for this year has gone down to 3.6 percent from the 4 percent average when the central bank’s last poll in September last year (see chart below).
The latest average forecast however remains above the mid-point of the BSP’s full-year target range of 2-4 percent.
According to survey respondents, there is a 58 percent chance that inflation would average between 3.1 and 4 percent this year. They said a 27 percent chance exists that price increases would average higher at between 4.1 and 5 percent.
For 2016, the mean inflation forecast also dropped to 3.7 percent from the 3.9 percent estimate when the BSP last conducted its survey in September last year. The latest headline forecast is near the upper-end of the central bank’s target range of 2-4 percent.
The BSP said the cut in the inflation forecasts by the private sector stems from the drop in the international price of oil. World crude oil prices have fallen near six-year lows amid higher shale oil production in the U.S. coupled with weak global demand and the refusal of the Organization of Petroleum Exporting Countries (OPEC) to cut production.
According to the BSP, the country imports 95 percent of its fuel requirements, with 76 percent of its imports emanating from the Middle East. Oil, which makes up nearly a third of the Philippines’ energy mix, is used largely by the transport sector.