Standard Chartered lowers RP inflation forecast to 3.8%

United Kingdom-based Standard Chartered Bank lowered its inflation forecast for the Philippines this year as inflation pressures soften. In a study titled "Philippines: Bangko Sentral ng Pilipinas paves the way for normalization," Standard Chartered economists Vincent Tsui and Simon Wong said the firm revised downwards the country's inflation forecast to 3.8 percent from 4.6 percent but kept its 3.3 percent forecast for 2011. "This is clearly dis-inflationary for Asian economies, including the Philippines, because of lowering import inflation and export demands," according to the study. The BSP could look forward to a benign inflation outlook in the coming months as oil prices have contracted to below $80 per barrel since May, Tsui and Wong wrote. "All this will mean more room for BSP to manage its normalization course in the near term," the economists said. On July 15, the BSP's Monetary Board decided to further slash the country's inflation forecast to 4 percent instead of the revised 4.7 percent this year and to 3 percent instead of 3.6 percent for 2011 due to lower-than-expected inflation rates in May and in June as well as stable oil and food prices. Standard Chartered sees inflation averaging 3.8 percent instead of 4.9 percent this third quarter and 2.9 percent instead of 4.5 percent in the fourth quarter. —JE/VS, GMANews.TV