Inflation Update: February headline inflation came in higher than forecast

Philippines headline inflation accelerated to 3.4% year-on-year in February from 2.8% in January 2024, mainly driven by accelerated prices of food and non-alcoholic beverages. January and February recorded the same m-o-m growth at 0.6%, suggesting that inflation is not yet slowing sequentially.

For now, Metrobank Research retains its yearend average inflation forecast at 4.3% (with a downward bias) as there continues to be strong upward inflation pressure for the year due to the rising rice prices and the impending effects of El Niño on food items and of emerging geopolitical risks on global market prices.

Lastly, the recent inflation print reinforces BSP’s decision to keep rates unchanged during its first Monetary Board meeting in February. BSP will likely hold rates steady for the first half of the year. The BSP is expected to stay hawkish, likely to lag the Fed’s first cut by up to a full quarter, as domestic price pressures remain stickier than anticipated.

Find out more about our latest inflation report below.