MANILA – Economists of First Metro Investment Corporation (FMIC) and the University of Asia and the Pacific (UA&P) have forecast the domestic inflation to fall below 2 percent by September this year due to base effects.
The country experienced elevated inflation rates in 2018, with the peak registered in September and October at 6.7 percent.
Last May, the six-month deceleration of inflation came to an end after it rose to 3.2 percent, 3 percent in April due to upticks in the prices of heavily-weighted food and non-alcoholic beverage index due to the impact of the dry season as well as water, electricity, gas and other fuels because of higher international oil prices.
Amid the higher inflation rate last May, average level to date stands at 3.6 percent, within the government’s 2 to 4 percent target band from 2018 to 2020.
According to FMIC and UA&P’s joint publication, The Market Call, rate of price increases may also go below 3 percent as early as July.
The expected slowdown of inflation to below 2 percent in the third quarter is seen to “boost consumer sentiment and pockets.”
Thus, the publication is optimistic for a rebound of the domestic economy after a slide to 5.6 percent in the first quarter of the year.
Aside from the slower inflation rate, the publication also forecasts remittances from Overseas Filipino Workers (OFW) to help boost domestic spending.
“We expect sustained inflow of remittances given strong demand for Filipino workers abroad, and their remittances should help fuel domestic demand,” it added.
Bangko Sentral ng Pilipinas (BSP) data show that total remittances grew by 6.4 percent year-on year last March to USD2.8 billion while it rose by 3.7 percent year-on-year in the first quarter of the year to USD8.1 billion.
OFW remittance is among the country’s main growth driver as it boosts Filipinos’ spending capacity. (PNA)
