Analysts see faster inflation in 2022
The Bangko Sentral ng Pilipinas said the normalization of economic activities is an upside risk to inflation this year. Photo shows shoppers at Baclaran Market in the town of Parañaque on Saturday (February 19, 2022). PHOTO BY JOHN RYAN BALDEMOR
According to the results of a survey conducted by the Bangko Sentral ng Pilipinas (BSP), analysts believe that the country’s average inflation rate will remain within target this year, albeit at a faster pace than their previous forecasts.
The results of a survey of 22 private sector economists showed the average inflation outlook for 2022 rose to 3.5% from 3.4% in the previous survey, the central bank reported in its latest monetary policy report.
The 2022 estimate was slower than the 4.5% average in 2021. It is also lower than the BSP projection of 3.7%, which is well below the 2-4% target of the government.
“Analysts expect inflation to stabilize within the government’s target range in 2022,” the BSP pointed out, “with broadly balanced risks surrounding the outlook.”
Over the political horizon, inflation is expected to slow and stabilize near the midpoint of the target, with most pundits expecting Bangko Sentral to end its accommodative policy and increase the reverse repurchase rate from 25 to 125. basis points in 2022-2024.
Upside risks to inflation, the central bank noted, include persistently high global oil prices, which could lead to higher transportation costs; and supply chain disruptions due to continued concerns over the Covid-19 Omicron variant, the aftermath of Typhoon ‘Odette’ and the possibility of further weather disruptions.
Other upside risks include the normalization of economic activities following the sustained deployment of vaccines and the lifting of movement restrictions to increase domestic demand; election-related expenses; and rising energy costs, he added.
Meanwhile, BSP said continued implementation of quarantine restrictions as Covid-19 cases remain high is seen as a downside risk to inflation, which could reduce demand for consumers and hamper economic recovery.
Base effects, along with lower domestic food costs and abundant food supply resulting from non-monetary government measures such as reduced import duties on pork and rice, could also lower prices. to consumption.