Inflation Update: Faster price rise settles within target

Annual headline inflation quickened in December and upside risks remain. Still, consumer-price increase settled within monetary authorities’ goal and is tipped to remain within target this year and the next.

With economic growth risks mounting, the Bangko Sentral ng Pilipinas (BSP) is expected to sustain its monetary policy easing cycle.

Key points 

• December inflation accelerated to 2.9% in December, with food costs remaining the biggest contributor on supply-side pressure from typhoons and higher demand during the holidays.
• Average annual inflation settled at 3.2%, in line with Metrobank Research’s expectations.
• Core inflation – which excludes volatile food and energy items – accelerated to 2.8% in December, faster than the 2.5% recorded in the preceding month.

What now? 

• We keep our inflation forecast of 3.2% for 2025 and 3.0% for 2026.
• Upside risks to inflation include geopolitics possibly fanning global oil costs and increasing demand-side pressure as policy makers move to boost consumption and investment.
• We continue to expect the BSP to cut rates by a total of 75 basis points this year, bringing the key rate to 5% 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.)  

Download our report below.

INFLATION UPDATE 

Fast then slow: Inflation comfortable within target

Consumer-price rise remaining on target allows further rate cuts.

Download