Philippine inflation continued to surprise to the downside, keeping the door wide open for the Bangko Sentral ng Pilipinas (BSP) to continue supporting the economy.

Consumer prices rose 1.4% year-on-year in April, the slowest since November 2019, when inflation was recorded at 1.2%.

Key points

• Slower increases in costs of food and non-alcoholic beverages mainly caused the sustained inflation downtrend in April.
• Core inflation, which takes out volatile food and energy items, was steady at 2.2% year-on-year in April. That’s the same pace recorded in March.
• Year-to-date headline inflation was 2.0%, right at the lower end of the BSP’s 2%-4% target.

Moving forward

• We lowered our inflation forecast for 2025 to 2.2% from 2.6% following the surprising consumer-price data.
• Given BSP’s hint of a shift to an “accommodative stance,” we expect three more rate cuts this year with the target RRP down to 4.75% by end-2025.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)