Inflation, or the rate of change in prices, averaging below market consensus of 2.1 percent in March to only 1.8 percent instead, is forecast to rise in the second quarter to around 2.5 percent, according to analysts. This compares against actual first-quarter inflation averaging only 2.2 percent.
The comparably higher second-quarter inflation is also seen deteriorating to around 3 percent in the third quarter and likely sustained at this level in the fourth quarter as well, analysts said.
This forecast is broadly in alignment with forecasts made by the Bangko Sentral ng Pilipinas (BSP) where inflation over a much longer timeline averages 2.4 percent this year but accelerates to around 3.3 percent in 2026 before moderating a little to around 3.2 percent in 2027.
“The inflation forecast is broadly balanced, risk-adjusted forecast similar to the baseline forecast” of the BSP, central bank assistant governor Zeno Abenoja, said.
The projected path of commodities prices tracked by economists as a basket comprising the consumer price index or CPI, takes into account the impact of announced reciprocal tariffs and their impact on global trade, and by extension, their consequent impact as well on domestic consumption, Abenoja explained.
BSP governor Eli Remolona Jr. acknowledged the after effects of reciprocal tariffs on domestic consumption and growth as “a new thing.”
“Like the rest of the world, we’re looking at slower growth. But unlike the rest of the world, we’re also looking at lower inflation while the rest of the world is looking at higher inflation,” he said. This, he explained, has to do with the Philippines having comparatively lower levels of trade with counterparts in the ASEAN and around the world.
“We have relatively less trade with many of the affected countries. We have one of the lower announced tariffs. It would be disruptive to us but not as disruptive as with some of the major trading countries,: Remolona said.
Under the reciprocal tariffs announced by US President Donald Trump, the Philippines has the good fortune of contending with a trade barrier of only 17 percent, or a fraction of the more punitive rates exceeding 100 percent in certain cases.
Remolona noted that consequently slower global trade translates as a negative event for growth.
“The global economy has been growing, partly because trade has been growing. The new (tariff) policies will tend to restrict trade and this will tend to slow growth. Some countries will be more affected than others,” Remolona said.
