Inflation Update: Taking a deep dive 

September headline inflation slipped to 1.9% on a year-on-year (YoY) basis, down from the 3.3% recorded in August. Year-to-date inflation now stands at 3.4% YoY, still within the Bangko Sentral ng Pilipinas’ 2%-4% full-year target.

Lower food inflation was a result of, in large part, rice disinflation and to some extent utilities and transport. Lastly, slower inflation was also noted across the services sector, in particular, recreation, restaurants, and personal services, all indicating slower demand and softer growth as elevated borrowing costs weigh on growth.

With the recent downside surprise for inflation, we have adjusted our full year 2024 forecast to 3.2%. The revision reflects the projected sustained decline in rice prices as we enter the harvest season and as other risks to inflation remain balanced. For full year 2025, we have likewise revised our forecast to 2.9%, barring any supply-side shocks, while we maintain our 3.0% forecast for 2026.

In a recent statement, BSP Governor Eli Remolona Jr. said that the BSP could possibly cut by 25 basis points (bps) at each of the remaining Monetary Board meetings, which should bring the BSP’s Reverse Repurchase (RRP) rate down to 5.75% by year-end, in line with our forecast.

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OCTOBER INFLATION UPDATE

Sub-2.0: Inflation takes a deep dive 

With a much slower inflation for September, we have adjusted our full-year inflation forecast for 2024 to 3.2%.

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