The Philippines is more likely to have a lower inflation rate this year driven by a possible decline in crude oil prices despite an increase in rice prices, an economist said.

Victor A. Abola, an economist from the University of the Asia and the Pacific, said in a briefing that inflation in 2024 may hit 3.8 percent, still within the central bank’s target.

“I’m more confident that we will see lower inflation going to average below within the BSP's target, 2 to 4 percent, and that starts in the first quarter,” Abola said.

He cited the U.S. Department of Energy’s data that oil prices recorded lower highs last year and slightly downward to the last month of 2024, noting the future prices in the West Texas Intermediate– used as a benchmark for crude oil– to have gone down below $70 per barrel.

“Well, the crude oil prices are showing a trend of lower lows, technically speaking, and lower highs. There's very little upward pressure,” he said.

On the other hand, the U.S. Energy Information Administration (EIA) recently said that it expects the Brent crude oil price “to decline than rise because we expect global oil production will more likely exceed our forecast than fall short of our forecast.”

“The potential for prices to exceed our current forecast is largely related to unplanned production disruptions, a risk highlighted by the recently escalating tensions in the Red Sea,” it said.

The EIA forecasted crude oil prices to average $82 per barrel in 2024 and $79/b in 2025.

“Our forecast for relatively little price change is based on expectations that global supply and demand of petroleum liquids will be relatively balanced,” it stated.

Meanwhile, the Philippines recorded its lowest inflation rate in December last year at 3.9 percent from the previous 4.1 percent in November.

However, the cost of rice posted a significant increase to 19.6 percent during the month from 15.8 percent. It also had the highest share of December’s headline inflation with 1.7 percentage points.