Inflation, which has tried to reaccelerate on two separate periods this year and could do so again in the months leading and up to the long Christmas holidays, was seen coming down instead, as price pressures ease during the period.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo expressed optimism that inflation will continue to fall from September level, averaging 4.4 percent, due to factors seen to pull down inflation in the closing months of the year.
The factors include expectations of a more subdued global growth this year, the resolution of supply issues due to port congestion and rice importation, as well as the end of the lean season and the start of the harvest season.
“Hopefully, the more decisive resolution of the supply pressures would provide greater momentum to more moderate inflation toward the end of the year,” the deputy governor said.
Guinigundo further said the confluence of the downside factors could provide a “more conducive inflation environment” for the country toward the end of 2014.
“Global growth is coming down and International Monetary Fund just came out with those forecast of lower global growth. So demand for commodities could be lower and the tendency for the prices of commodities will not be that high,” Guinigundo said.
“The other downside risks [pertain to] the effort to address the supply issues. The National Food Authority was awarded a government-to-government import permit from Thailand and Vietnam,” he added.
“Thirdly, the lean season is about to come to an end. And then you’ll have the harvest season. So harvest season, plus more importation of rice, and then much less port congestion, I think, will help bring about a more conducive inflation environment,” Guinigundo said.
In a separate commentary, ING Bank Manila economist Joey Cuyegkeng said that the downside risks pertain not only to the 2014 inflation numbers but more so to the 2015 inflation forecast, as well.