Research: 2H RP inflation to average below 4%

Inflation in the second half of the year would average below 4 percent, as some advanced countries like the US are easing pressure on commodity prices, Metrobank's First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said Wednesday. In their August's capital markets research titled "Economy on a Strong Growth Trajectory," FMIC and UA&P said, "Inflation will mostly be below 4 percent in the second half.... Barring any catastrophic calamities like last year's, neither will there be inflationary threats on the domestic front." Latest data from the National Statistics Office showed that inflation was steady at 3.9 percent in July, bringing the average inflation rate to 4.2 percent in the first seven months of the year. Bangko Sentral ng Pilipinas (BSP) Deputy Gov. Diwa Guinigundo earlier said the BSP is maintaining its inflation forecast this year at 4 percent. The BSP set an inflation target of 3.5 to 5.5 percent this year and 3 to 5 percent from 2011 to 2014. "We see that stable to lower inflation rates can be felt for the rest of the second half. Despite the upcoming typhoons, we see no other threats that may force inflation to go up. We will stick to our 2010 [whole year] forecast for inflation of 4.1 percent," FMIC and UA&P noted. Also, FMIC and UA&P said the multiplier effect of the gross domestic product in the first half of the year would likely carry over into the third quarter. The country posted a GDP growth of 7.9 percent in the second quarter. The study said that the country's GDP growth would likely slowdown in the third quarter but then continue to expand over 6 percent on the back of robust activity in the construction, mining, and manufacturing sectors. —JE, GMANews.TV