Economists project the country’s inflation to average 2.3 percent this year, lower than the 2.5 percent average recorded in 2019, according to a Bangko Sentral ng Pilipinas (BSP) survey.
In its Second Quarter Inflation Report released on Monday, the central bank said results of its poll of private-sector economists showed that the mean inflation forecast for 2020 eased to 2.3 percent from 2.9 percent.
The figure matches the BSP’s own estimate and falls within the 2.0- to 4.0-percent target of the government.
“Analysts expect inflation to hover near the lower end of the target range in 2020, with risks to the inflation outlook generally leaning toward the upside, given the anticipated recovery in domestic demand following the recent relaxation of…quarantine measures” the BSP explained.
The government placed Luzon under enhanced community quarantine (ECQ) on March 17 to contain the spread of the coronavirus disease 2019 (Covid-19) in the country. This lockdown ended on May 16, when Metro Manila and certain regions were put under modified ECQ until May 31.
The National Capital Region and other areas in the country have been under general community quarantine since June, allowing businesses that have closed since mid-March to gradually resume operations.
Key upside risks to consumer price growth are the possible strong rebound in global oil prices; increase in private consumption following the recent easing of lockdown measures; challenging supply chain and logistics for basic and essential commodities; higher prices of food, including rice; and adverse weather conditions, such as typhoons, which could affect food supply.
According to the report, estimated futures prices of Dubai crude oil as of end-June, which are based on movements of the Brent crude futures price, showed a higher path for 2020 to 2022, compared with the previous quarter’s level.
Downside risks to inflation, meanwhile, are seen to come from subdued domestic demand because of high unemployment following the closure of businesses; persistent downside pressures on global crude oil prices; and price ceilings imposed by the government on selected commodities.
The BSP report comes comes after Asian Development Bank survey suggested that at least 65.9 percent of enterprises in the country temporarily closed after the ECQ was implemented.
The Philippine Statistics Authority earlier reported that an estimated 7.3 million Filipinos were jobless in April, which translates to a record 17.7-percent unemployment rate.