The December 2024 inflation of 2.9 percent is within the Bangko Sentral ng Pilipinas (BSP) forecast range of 2.3 to 3.1 percent. This brings the average full year inflation to 3.2 percent, well within the target of 2-4 percent for 2024.
The latest inflation outturn is consistent with the BSP’s assessment that inflation will remain anchored to the target range over the policy horizon.
Nonetheless, the balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates.
The impact of lower import tariffs on rice remains the main downside risk to inflation.
Domestic demand is likely to remain firm but subdued. Private domestic spending is expected to be supported by easing inflation and improving labor market conditions.
However, downside risks in the external environment could materialize and temper economic activity and market sentiment.
On balance, the within-target inflation outlook and well-anchored inflation expectations continue to support the BSP’s shift toward less restrictive monetary policy.
Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks to inflation, notably geopolitical factors.
Looking ahead, the Monetary Board will maintain a measured approach to monetary policy easing to ensure price stability conducive to sustainable economic growth and employment.
