Further decline in inflation seen

Inflation is expected to decline further this year as analysts project a slowdown driven by favorable supply-side factors, allowing the Bangko Sentral ng Pilipinas (BSP) to cut interest rates further.

- KEISHA TA-ASAN

In a report, Nomura economists Euben Paracuelles and Nabila Amani said the full-year consumer price index (CPI) may slow down to 2.7 percent this year from 3.2 percent in 2024.

“The factors pushing up headline inflation in December are likely to be temporary. Importantly, the output gap remains negative, and we continue to assume that the impact of lower rice import tariffs on food inflation will continue to play out in coming months,” they said.

Based on data from the Philippine Statistics Agency, inflation rose for the third straight month in December to 2.9 percent from 2.5 percent in November, driven by faster upticks in housing and transport costs.

Despite the increase, the 3.2 percent average inflation for 2024 remained within the BSP’s two to four percent target, marking the first time in two years that inflation settled within the target range.