PH Inflation Forecast Raised

ANZ Research has raised its inflation forecast for the Philippines for this year and the next, as it anticipates inflation to remain above the central bank’s 2-4% target range in the fourth quarter.

Philippine inflation is now expected to average 6% this year, up from the previous projection of 5.3%.

In a note, ANZ Research economists Debalika Sarkar and Chief Economist Sanjay Mathur stated that Philippine inflation is now expected to average 6% this year, up from the previous projection of 5.3%.

The 2024 projection has been adjusted to 3.5% from 3.0%.

"If realized, 2023 inflation will be higher than the 5.8% average of last year and the 5.6% forecast of the Bangko Sentral ng Pilipinas (BSP)," they highlighted. This would also mark the second consecutive year that inflation exceeds the BSP's 2-4% target range.

ANZ Research also added, "The trajectory underlying our revised forecast suggests that inflation will remain above the BSP’s 4% tolerance level even in the fourth quarter of 2023 and may return to the target range in the first quarter of 2024."

Moody’s Analytics expressed its greatest concern regarding Philippine inflation to be the El Niño weather phenomenon, which could further impact agricultural production and keep food prices elevated for an extended period.

Higher train fares could also exert upward pressure on inflation, they noted.

However, Moody's stressed, "Despite that, we expect inflation to ease over the coming months and reach the upper bound of BSP’s 2% to 4% target by the end of the year. Unless inflation across food and energy proves to be stickier than expected, the central bank is likely to keep rates steady for the rest of the year and cut rates from the first quarter of 2024. We anticipate inflation to average 5.7% in 2023."

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