Fitch Solutions unit BMI said Wednesday the lower Philippine inflation this year is expected to support further interest rate cuts by the Bangko Sentral ng Piliponas, which would drive consumer spending in 2025.
In a report, BMI said inflation “has shown signs of a slow easing,” settling at 2.1 percent in February, the lowest since September 2024 and within the government’s 2 percent to 4 percent target range.
“This would support the BSP cuts which would in turn reduce debt servicing costs for consumers in the Philippines,” BMI said.
BMI expects the BSP to cut its policy rates by another 25 basis points next week.
“As such, we hold a positive outlook for consumer spending in the Philippines, with an acceleration in real household spending growth – from 5 percent in 2024 to 5.3 percent in 2025,” BMI said.
The firm also expects household spending in the country to reach P13.2 trillion this year.
“Spending will remain influenced by the elevated inflationary pressures seen over 2025 as well as currently high debt levels, along with related debt servicing costs,” BMI said.
It said a tight labor market would support spending, as real wage growth returns to positive territory, boosting purchasing power over the year.