Prices to remain stable despite El Niño, polls — BSP

The central bank has downplayed the impact of El Niño and election-related spending on consumer prices, saying inflation might come in below the official forecast this year. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo told a briefing after a government economic briefing on Wednesday monetary authorities might lower the inflation forecast to 4 percent from the latest projection of 4.7 percent. "The official projection is still 4.7 percent but it could come down to 4 percent and already counting in the effects of El Nino. But from now until the Monetary Board meets [on March 11], several factors could still change," he said. Guinigundo said monetary authorities have to consider easing inflation in the first two months of the year brought about by lower oil and commodity prices. Inflation eased to 4.3 percent in January from an eight-month high of 4.4 percent in December mainly due to lower commodity and oil prices. The deputy governor said inflation might average 3.4-4.5 percent in February on the back of lower food prices. Guinigundo said a prolonged dry spell due to El Niño could result in a 0.4-percentage point rise in inflation this year and 0.2 point next year, which had been factored into the latest inflation forecast. The central bank has set an inflation target of 3.5-5.5 percent this year and 3-5 percent next year. The target is different from the forecast, which changes based on prevailing conditions. Guinigundo said heightened spending during the May elections would have a small effect on inflation but could boost the economic growth by 0.34 percent. The government is aiming for 2.6-3.6 percent economic growth this year from 0.9 percent last year. Guinigundo said monetary authorities could maintain its accommodative stance due to stable prices. — NPA, GMANews.TV