The Bangko Sentral ng Pilipinas (BSP) said Friday it expects December 2024 inflation to settle between 2.3 percent and 3.1 percent.
It said this would bring the average inflation to 3.2 percent, still within the 2 percent to 4 percent inflation target for 2024. Inflation reached 2.5 percent in November.
“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.
“Nonetheless, these are expected to be offset in part by lower prices of agricultural commodities like rice,” it said.
The BSP said it would continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making.
The Development Budget Coordination Committee (DBCC) in consultation with the BSP earlier decided to retain the inflation target of 2 percent to 4 percent for 2025 to 2026 and set the same target for 2027 to 2028.
The BSP said that by announcing a medium-term inflation target, it 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 inflation target remains an appropriate representation of the medium-term goal for price stability, given the current structure of the Philippine economy and the macroeconomic outlook over the next few years.
“Prospects for aggregate demand and supply-side conditions point to a manageable inflation outlook despite upside risks. Inflation expectations likewise remain anchored to the current inflation target,” the BSP said.
“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. At the same time, the risk of possible domestic and external shocks will warrant continued close monitoring and proactive intervention measures from the whole of government,” it said.
The DBCC said that in consultation with the BSP, it would will continue its annual analysis of macroeconomic trends and potential structural shifts to ensure the appropriateness of the inflation target.
It said it would carefully consider the results of the review of the BSP’s monetary policy framework in 2025 to 2026 in the subsequent assessment of the inflation target.
The BSP said it would 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.
