The Bangko Sentral ng Pilipinas (BSP) on Friday projected that inflation for November 2024 will settle within the range of 2.2 percent to 3 percent. This slight increase from 2.8 percent in October, the BSP said, is attributed to the combined effects of unfavorable weather conditions driving up the prices of vegetables, fish, and meat, as well as higher electricity rates, rising petroleum prices, and the depreciation of the peso. But even then, the price of the rice staple is expected to ease, providing some counterbalance to overall inflationary pressures.
In its own inflation forecast, the Bank of the Philippine Islands (BPI) estimates November’s year-on-year inflation at 2.5 percent, a slight increase from October’s 2.3 percent. BPI said supply disruptions caused by recent typhoons have contributed to higher month-on-month price increases, especially in vegetable markets. The depreciation of the peso also added pressure on prices during the month. However, BPI points out that the slower increase in rice prices, thanks to favorable base effects and improving supply prospects, helped mitigate the overall inflationary impact. Furthermore, stable global oil prices have helped curb sharper rises in other essential goods.
Looking ahead, both institutions agree that inflation will likely remain manageable over the next six months, bolstered by slower rice price increases and relatively stable commodity prices. However, risks to the outlook remain, with weather disturbances and potential further depreciation of the peso among the most notable factors that could drive inflation higher.
The BSP’s cautious stance remains focused on ensuring price stability that supports balanced and sustainable economic growth. With inflationary pressures still evident, the central bank is expected to maintain a measured approach in its policy stance.
In light of the manageable inflation outlook, BPI sees a potential rate cut from the BSP in December although such a move will depend on several factors, including the performance of the peso in the coming weeks. If the peso remains under pressure or if the Federal Reserve refrains from cutting rates at its upcoming meeting, the BSP may choose to hold its policy rate steady, especially if the peso’s volatility intensifies before their December 19 meeting, the lender said.
The BSP and experts at BPI and others in the financial sector continue to closely monitor global developments, particularly in major economies like China, which could have significant implications for inflation and economic growth prospects in the Philippines.
