Already low inflation thus far averaging 2.37 percent in the first four months should ease further in the coming months and fall even lower than the low end of the target range of 2 percent to 4 percent set by the Bangko Sentral ng Pilipinas (BSP), the Manila unit of the Dutch financial services giant ING Group said.
In commentaries on Tuesday following the release of inflation data in April by the Philippine Statistics Authority (PSA), ING Bank economist Tim Condon said inflation should fall lower than 2 percent during the quarter and likely stay there til around September.
“Based on the disinflation drivers, we expect inflation to break through the bottom of the Bangko Sentral ng Pilipinas’s 2 [-percent] to 4- percent target range in the current quarter,” Condon said.
The sub-2-percent inflation environment was seen to persist between now til around September when price pressure on food items and on energy were seen at their weakest.
The last time inflation averaged lower than 2 percent was in August of 2009, or six years earlier when it averaged 1.7 percent.
Monetary officials, meanwhile, said the developments that could push inflation right back up and tread higher than the low end of this year’s 2-percent to 4-percent target range are typhoon-related food-supply disruptions as the moonsoon season begins to intensify or as disruptions caused by the El Niño phenomenon starts to bite.
Likewise, inflation should benefit from so-called base impact from conditions last year when inflation began to trend up from May to August more or less.
Joey Cueyegkeng, economist at ING Bank Manila, consequently forecasts inflation averaging 2.5 percent this year.
April’s inflation represented a slowdown from 2.4 percent the previous month. It was also significantly slower than the 4.1 percent reported the previous year.
This brought the four-month inflation rate to 2.3 percent or near the bottom end of the government target for the year.
BSP Deputy Governor for Monetary Stability Sector Diwa C. Guinigundo, had said inflation was likely to trend lower than 2 percent from a month-on-month perspective.