BSP forecasts 2.2%-3% February inflation
The Bangko Sentral ng Pilipinas (BSP) forecasts the country’s inflation for the month of February may be steady or lower compared to January’s actual 2.9 percent consumer price index.
In a statement Friday, Feb. 28, the BSP expects the next inflation could hit a low of 2.2 percent or a high of three percent versus the previous month.
It noted that upward price pressures in February came from the increase in electricity rates and oil prices, and from the higher prices of key agricultural commodities such as fish and meat.
“Nonetheless, these are expected to be offset in part by lower prices of rice, fruits, and vegetables as well as negative base effects,” said the BSP.
The central bank’s policy-making arm, the Monetary Board, is currently taking a measured approach in further easing the policy rate. As of its last monetary policy decision on Feb. 13, the BSP kept its target reverse repurchase (RRP) rate unchanged at 5.75 percent.
At the time, BSP Governor Eli M. Remolona Jr. said they will continue to pursue a measured shift to a less restrictive policy stance while waiting for its previous 75 basis points (bps) rate cuts to stimulate economic growth and employment amid uncertainty over global trade policies and their impact local shores.
The next policy meeting is on April 3. Generally, economists and market analysts expect the BSP will cut the RRP rate by a combined 50 bps this year. The central bank will also reduce banks’ reserve requirements ratio or the RRR by 200 bps by March 28.
After leaving the key rate on hold, the BSP revised its risk-adjusted inflation forecast to 3.5 percent for 2025 versus its 3.4 percent estimate last Dec. 19. The risk-adjusted forecast for 2026 remains at 3.7 percent.
BSP Deputy Governor Francisco G. Dakila Jr. said the risks to the inflation outlook have become broadly balanced for 2025 and 2026. He noted though that upside pressures may emanate from the utilities sector while the impact of lower import tariffs on rice continue to be a downside risk to the inflation outlook.
Meanwhile, economists surveyed by the BSP have a mean forecast of 3.1 percent inflation for this year and 3.2 percent in 2026, both projections are within the government target range of two percent to four percent.
Based on the December 2024 BSP Survey of External Forecasters, the 24 economists surveyed said that for the first quarter this year, inflation will likely average at 2.6 percent and higher at 2.9 percent for the second quarter.
Economists agree with the BSP that inflation will be low and manageable in the next two years amid broadly-balanced risks.
Based on the survey, analysts still think the downside risks to the inflation outlook will come from the lower rice prices with the implementation of Executive Order No. 62, and lower oil prices. They also point to an emerging favorable outlook for global oil prices and the stable and low core inflation. Core inflation, which does not include food and energy, is the component of inflation influenced by monetary policy.
The main upside risks to inflation continue to be supply disruptions due to geopolitical tensions and adverse weather conditions.