INFLATION is expected to settle below 3.0 percent this month despite supply-side shocks brought by a series of storms and geopolitical tensions, the research unit of Metropolitan Bank & Trust Co. (Metrobank) said.
“Despite the acceleration of prices in November, the latest inflation print is consistent with our forecast that inflation will remain below the 3-percent level in the last few months of 2024,” Metrobank Research said in a commentary.
Consumer price growth picked up to 2.5 percent last month from 2.3 percent in October due to the damage caused to farm output by a series of storms that battered Luzon. It remained, however, within the Bangko Sentral ng Pilipinas’ 2.0- to 4.0-percent target.
But while prices of some key food items rose, rice inflation slowed to 5.1 percent in November from 9.6 percent a month earlier and is expected to continue trending downward given lower global prices of the grain and the government’s July move to slash import tariffs.
Metrobank Research said that year-to-date inflation — it averaged 3.2 percent as of end-November — indicates a full-year result within the target range.
It maintained a 2024 forecast of 3.2 percent and also kept that for next year at the same level even as demand-side pressures rise as the BSP continues cutting key interest rates.
The projection for 2026 also stayed at 3.0 percent, assuming no significant supply-side shocks.
“As the inflation projection continues to remain within target, Metrobank Research maintains its forecast of another 25-bp cut in the BSP’s meeting in December, bringing down its year-end forecast for the Reverse Repurchase (RRP) rate to 5.75 percent in 2024,” it said.
The BSP’s policymaking Monetary Board began lowering key interest rates in August as inflation settled within the 2.0- to. 4.0-percent target.
Two 25-basis point cuts — the second was made in September — have lowered the BSP’s benchmark rate to 6.0 percent from the 17-year high of 6.5 percent reached as monetary authorities battled a surge in inflation.
The central bank last week said that the Monetary Board would “consider the latest inflation outturn” — this would be November’s 2.5 percent — during its last policy meeting for the year on Dec. 19.
“The BSP will continue to maintain a measured approach in its easing cycle to ensure price stability conducive to sustainable economic growth and employment,” it added.
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