Inflation expected to hover at 2 percent level

For the rest of 2024

MANILA, Philippines — Headline inflation is expected to remain stable and settle within the two percent level, at least for the last three months of the year, giving the central bank more room to continue its policy easing. 

In a report, Metrobank Research, the research unit of Metropolitan Bank & Trust Co., said inflation would likely be steady at the two percent level from October to December.  

This came after the September print eased to an over four-year low of 1.9 percent, even falling below the expectation of the Bangko Sentral ng Pilipinas (BSP). 

The sharp reduction was primarily due to slower increases in the prices of food and non-alcoholic beverages, transport and housing, water, electricity, gas and other fuels.

“Rice prices are expected to continue to weigh on headline inflation, driven by lower tariffs and increased local supply following the harvest season,” Metrobank Research said.

The reduction in the overall food inflation was due to a slower increase in the price of rice at 5.7 percent in September – the lowest rate recorded in over a year. 

This was a result of the implementation of Executive Order 62 that effectively lowered the tariff on imported rice and led to import volume rising to 177,000 metric tons, up by over 40 percent.

The decline in rice prices is seen to become more pronounced for the rest of the year following India’s decision to lift its export ban on non-basmati white rice and as retailers deplete their inventories bought at higher prices. 

“This development is likely to offset potential oil price hikes associated with geopolitical tensions in the Middle East,” Metrobank Research said. 

Local fuel pump prices were on an upward trend for the third straight week as global oil prices picked up amid escalating tensions in the Middle East. 

As inflation would likely be steady until yearend,
Metrobank Research said the BSP should have scope to continue its monetary easing. 

It noted that the latest 25-basis-point cut along with the 250-basis-point reduction in the reserve requirement ratio should provide a more accommodative policy
INFLATION from B1

environment to help boost private consumption and investments which have been tempered by high interest rates and elevated inflation.

A few days ago, the BSP slashed key rates by 25 basis points, the second time for 2024, bringing the target reverse repurchase rate to six percent from 6.25 percent.

Metrobank Research has maintained its baseline forecast of a cumulative 75 basis points worth of easing for the year.

This means that the BSP should deliver another 25-basis-point reduction in its last policy meeting in December.

For 2025, Metrobank Research is expecting a bigger 100-basis-point easing from the BSP.