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Inflation Update: Lower tariff rates on rice seen to reduce inflation
We are revising our inflation forecast for 2024 and 2025 because of the recently approved cut in tariff rates for rice from 35% to 15%.
By Metrobank Research
Following our last inflation report dated June 5, 2024, which indicated a downside bias to the 4.0% average inflation forecast for full year (FY) 2024 owing to the slower-than-expected sequential growth in the May inflation print (3.9% year-on-year), we have revised our 2024 and 2025 forecasts to 3.3-3.6% and 3.3-3.7%, respectively.
Our analysis on the reduced tariff rates to 15% from 35% as approved by the National Economic and Development Authority (NEDA) shows that the current market price of rice could be reduced to around PHP 7 to 9 per kilogram, which will reduce the contribution of rice to headline inflation to -0.2 to 0.2 percentage points, a significant drop from its 1.6-percentage-point contribution in May 2024.
Inflation Update: Lower inflation forecasts for 2024 and 2025
We have revised our inflation forecasts owing to the approved reduction in rice tariffs.
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