Inflation Update: Moving within target

Philippine headline inflation accelerated to 2% year-on-year (YoY) in January, starting the year off within the Bangko Sentral ng Pilipinas’ target of 3±1%.

Key points

• While headline inflation settled at 2.0%, core inflation, which excludes volatile food and energy items, also quickened to 2.8% in January.
• The housing, water, electricity, gas, and other fuels basket was the primary upward driver, with faster price rises recorded for rentals and electricity, specifically outside the National Capital Region.
• Food inflation moderated in the month due to lower inflation for most major foods and persisting rice deflation.

What’s next

• Metrobank maintains its full-year forecast of 3.3% inflation for 2026, as low base effects and recovering demand may accelerate price rises later in the year.
• With inflation settling within the Bangko Sentral ng Pilipinas (BSP)’s target, continued BSP easing is expected to stimulate economic growth.
• Metrobank forecasts that the BSP will deliver a cumulative 50 basis points worth of cuts this year. This will bring the target reverse repurchase (RRP) rate down to 4.00% by year-end.

(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.)

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