December inflation likely within 2.3-3.1 percent range

MANILA, Philippines — Inflation likely settled within the 2.3 to 3.1 percent range this month, which could bring the full-year average to 3.2 percent, the Bangko Sentral ng Pilipinas (BSP) said.

“Upward price pressures in December could stem from increased prices of major food items owing to the supply disruptions from recent weather disturbances, as well as higher electricity rates and petroleum prices,” the BSP said.

However, it said the lower prices of agricultural commodities like rice could mitigate price pressures.

Headline inflation picked up to 2.5 percent in November from 2.3 percent in October.

Inflation averaged 3.2 percent from January to November, setlling within the BSP’s target range.

“Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making,” it said.

The expected inflation average of 3.2 percent in 2024 is also well within the BSP’s two to four percent target for the year.

In a separate statement, the BSP said the government has maintained the two to four percent target for 2025 up to 2028.

“By announcing a medium-term inflation target, the BSP aims to strengthen its forward-looking approach to monetary policy formulation with the view of helping anchor inflation expectations to the target,” it said.

The BSP, in consultation with the Cabinet-level Development Budget Coordination Committee (DBCC), said the target range represents an appropriate medium-term goal for price stability, given the current structure of the Philippine economy and the macroeconomic outlook over the next few years.

The central bank also said that the prospects for aggregate demand and supply-side conditions point to a manageable inflation outlook despite upside risks.

Likewise, inflation expectations are projected to remain anchored to the current inflation target.

“The outlook for domestic aggregate demand will be supported by easing monetary conditions, improving labor market dynamics, and continued implementation of investment-enhancing structural reforms,” the BSP said.

But risks of possible domestic and external shocks warrant continued close monitoring and proactive intervention measures from the whole of government, the BSP added.

“Looking ahead, the DBCC in consultation with the BSP, will continue its annual analysis of macroeconomic trends and potential structural shifts to ensure the appropriateness of the inflation target,” it said.

The central bank will also review its monetary policy framework for 2025 and 2026 as it assesses the inflation target.

“The BSP will continue to ensure that monetary policy settings align with its primary mandate of safeguarding price stability, which is conducive to balanced and sustainable economic growth and employment,” it said.