Inflation seen at 4.5-5.2%

RATE LOWEST IN 29 MONTHS ON LOWER
CRUDE COST, STEADY RICE YIELD

By VG Cabuag
Reporter

CONSUMER prices in November are expected to further go down as a result of lower cost of crude in the domestic market and rice production is seen going steady.
           
Bangko Sentral ng Pilipinas governor Amando M. Tetangco Jr. said inflation rates for this month could hit between 4.5 and 5.2 percent, which could be the country’s lowest in 29 months.
           
The last time inflation went below the 5.4 percent level was in May 2004 when it hit 4.5 percent.
           
“Inflation in November is seen to decelerate further given lower rice and domestic oil prices alongside a strong peso,” Tetangco said in a text message sent to reporters.
           
There is, however, a general downtrend of the country’s inflation rates, computed on the prices of a basket of basic commodities and services, this year from a high of 7.6 percent in February to 5.4 percent in October.
           
For the 10-month period, the consumer prices already averaged at 6.6 percent. This, however, is still higher than the 4 to 5 percent target for the year.
           
According to data from the National Statistics Office, rice prices last month went down by less than .33 percent, while prices of fuel, light and water went down by .35 percent.                    
For this year, the inflation rate forecast of the Development Budget Coordinating Committee (DBCC) was between 6.9 percent and 7 percent.
           
The BSP wants to revise such inflation forecast to 6.5 percent due to the easing up pressure on oil prices and the rising peso against the dollar.
           
Government economic agencies change their forecast from time to time, while target is being fixed for a particular period.
           
The central bank last week upgraded its peso-dollar exchange outlook for 2007 to between P50 and P52 to $1, from the previously adopted P51 to P53 exchange rates. The current peso-dollar exchange rate, however, already hovered at P49. On the other hand, oil companies made a series of reductions on their prices—almost on a weekly basis—since late August.
           
BSP last week also narrowed its forecast on the prices of Dubai crude to $62to $64 per barrel from $61to $67 per barrel.
           
Government economic managers said they are optimistic that the 4- percent to 5-percent inflation rate may be achieved next year if there are no adverse shocks on crude prices during the period. (With Bloomberg)  

Business Mirror

November 29, 2006