Inflation seen to cool below 2% next year

MANILA, Philippines — Private economists further lowered their inflation forecasts for 2023 and 2024 as prices cooled due to the aggressive rate hikes delivered by monetary authorities, outgoing Bangko Sentral ng Pilipinas Governor Felipe Medalla said.

In a forum, Medalla said results of the latest survey of private economists for June showed a lower inflation forecast of 5.7 percent from 5.8 percent for 2023 and 3.5 percent from 3.6 percent for 2024.

Medalla said these latest projections for the next two years are higher than the forecasts made by the BSP.

During its last rate-setting meeting, the central bank lowered its inflation forecast to 5.4 percent from 5.5 percent for this year but raised next year’s projection to 2.9 percent from 2.8 percent.

Inflation averaged 7.5 percent in the first five months, well above the central bank’s two to four percent target range, despite cooling to a 12-month low of 6.1 percent in May.

The BSP chief said inflation would ease within the two to four percent target band by October or November this year due to the tightening cycle undertaken by monetary authorities as well as non-monetary measures implemented by the Marcos administration.

“Our forecast is that we will have to be below two percent or very close to two percent next January. The reason for that of course is January last year was so high. In fact, we will be below four percent by October or November,” Medalla said.

For 2025, economists are expecting a slightly higher inflation of 3.6 percent from 3.5 percent.

The latest survey covering 26 private sector economists was conducted from June 6 to 14.

According to Medalla, private sector inflation expectations have declined and are starting to settle firmly within the two to four percent target range.

“Our (inflation) forecasts lead the private sector forecasts,” he added.