MANILA – Inflation rate in the Philippines may soften to 4 percent or lower as early as September 2023, a Bangko Sentral ng Pilipinas official said Friday.
BSP Deputy Governor Francisco Dakila Jr. said in a panel discussion during the Post-SONA Philippine Economic Briefing in Cebu the trajectory of inflation in the past six months was very encouraging.
He said inflation was expected to average 5.4 percent this year. “Barring any unforeseen supply shocks… inflation should be below 4 percent by the fourth quarter this year,” Dakila said.
“There is a chance we may go back to the target [range] even before the fourth quarter,” he said, referring to the months of August and September.
Inflation in July eased to a 16-month low of 4.7 percent from 5.4 percent in June, pulled down by slower year-on-year increases in the prices of food and non-alcoholic beverages, housing, water, electricity, gas and other fuels.
It was the sixth consecutive month of deceleration in headline inflation and the lowest since March 2022.
This brought the average inflation in the first seven months to 6.8 percent, still higher than the target range.
Inflation is projected to average 5.4 percent in 2023 and 2.9 percent for 2024.
Meanwhile, the BSP’s preliminary forecast indicates that inflation would likely settle at 3.2 percent in 2025.
Data from the Philippine Statistics Authority showed that from a peak of 8.7 percent in January 2023, inflation eased to 8.6 percent in February, 7.6 percent in March, 6.6 percent in April, 6.1 percent in May and 5.4 percent in June.
The BSP raised the policy rates by a total of 425 basis points to 6.25 percent from May 2022 to March 2023, before taking a prudent pause in the last two Monetary Board meetings amid the sustained easing of inflation.
Finance Secretary Benjamin Diokno said the intensified measures of the government to rein in inflation would help ensure that it would fall within the target range by the fourth quarter.