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Inflation Update: November inflation slows, but elevated inflation still seen in 2024
Geopolitical conflicts, lingering supply constraints, and the compounding effects of El Nino may keep inflation elevated. For now, we shave off a few percentage points from our inflation forecast for 2023 and 2024.
By Metrobank
Philippines headline inflation eased further to 4.1% year-on-year in November from 4.9% in October (+0.16% month-on-month), driven by a slower annual increase in the prices of food and non-alcoholic beverages, transportation, as well as restaurants and accommodation services. However, rice inflation notably picked up from the previous month, at 15.8% year-on-year vs 13.2% in October, suggesting lingering supply side risks.
The lower-than-expected annual inflation rate is reassuring as it is slowly approaching the BSP’s target range of 2%-4% inflation. However, given the presence of existing geopolitical conflicts and lingering supply constraints which could be exacerbated by the effects of El Nino until early next year, Metrobank Research sees above-target inflation to persist through 2024. We therefore expect the BSP to keep its hawkish bias until the latter half of next year.
Given that the downtrend in headline inflation beat Metrobank Research’s baseline estimates from November, we make the following downward revision in our forecast: 2023 Average inflation at 6.0% (from 6.1% previously) and 2024 Average inflation at 4.3% (from 4.6% previously).
Find out more on our latest inflation report below.
Inflation Updates (December 5, 2023)
We have revised our inflation forecasts downward to 6.0% in 2023 and 4.3% in 2024.
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