(Update) RP 2006 inflation likely below 6.8%

BY PATRICIA DE LEON, GMANews.TV The Philippines will miss its 2006 inflation target of 4-5 percent but the actual figure may come in below 6.8 percent, Bangko Sentral ng Pilipinas (BSP) governor Amando Tetangco said Friday. "We might have a 2006 average inflation below 6.8 percent. But inflation will continue to decelerate until 2007, when we might hit 4.5 to 5 percent in the first quarter," Tetangco told reporters on the sidelines of the government's launching of a blueprint for capital market development. "Inflation pressures this year came mainly from supply side factors," Tetangco said. Crude prices rose to record highs in July due to geopolitical tensions in the Middle East, but have since tapered-off as jitters wore off. The BSP governor however remained confident that the pace of price increases was on a downtrend due to the easing prices of oil, stable food prices and the stronger peso. "The outlook for inflation is that it will continue on a decelerating trend until next year," Tetangco said. Despite the slower rise in consumer prices, Tetangco said the BSP will continue to assess developments before making an outright interest rate cut. Tetangco said crude price futures remain uncertain, adding to inflation worries. He also said the El Nino weather phenomenon expected next year could affect the agriculture industry negatively and push food prices higher. "The expectation for next year's El Nino is mild, but if it becomes more severe then it will have an impact on food prices," Tetangco said. - GMANews.TV