Inflation Update: Lower January 2023 inflation may mean no rate cuts yet

The Philippines’ January headline inflation came in lower than the consensus forecast of 3.1% due to less upward price pressures on key food items and favorable base effects when inflation peaked at 8.7% in January 2023.

For now, we are retaining our yearend average inflation forecast at 4.3%, albeit with a strong downward bias given the current print. On the other hand, strong inflation pressure remains due to El Niño and its effects on food items, ongoing geopolitical risks, and rising rice prices.

Lastly, the recent inflation print provides the Bangko Sentral ng Pilipinas (BSP) a reason for holding its policy rates steady at its first Monetary Board meeting on February 15. The BSP is further expected to stay relatively more hawkish, and likely to cut rates only after a full quarter following the US Fed’s first rate cut.

Find out more In our latest inflation report below.