Philippine Inflation Trends Higher in December
Philippine inflation trends continued upward in December, reaching 2.9%, marking the third consecutive monthly increase. Rising food and utility costs remained the primary drivers behind this acceleration. Despite exceeding earlier forecasts, the average inflation rate for 2024 settled at 3.2%, comfortably within the Bangko Sentral ng Pilipinas’ (BSP) target range of 2%-4%. This stability has given the BSP some room to adjust monetary policies while keeping inflation expectations anchored.
Core Inflation and Monetary Policy Adjustments
Core inflation, which excludes volatile food and energy prices, also edged higher to 2.8% from November’s 2.5%. Despite these moderate increases, the BSP maintained its stance on gradual monetary easing, prioritizing a balance between price stability and economic growth. Policymakers remain confident that inflation expectations are well-anchored, supported by manageable energy and rice prices.
Monetary Easing Continues Amid Slow Economic Growth
In December, the BSP implemented its third consecutive 25-basis-point rate cut, reducing the key policy rate to 5.75%. This move was in line with market expectations and reflected the central bank’s commitment to supporting economic recovery amid signs of slowing growth.
Analysts anticipate additional quarter-point cuts throughout 2025, potentially bringing the rate down to 5.00% by September. However, external factors, particularly the direction of U.S. Federal Reserve policy, will influence the BSP’s future actions.
Philippine Inflation Trends: Outlook for 2025
Looking ahead, the BSP signaled a cautious approach to further rate adjustments, closely monitoring both domestic and global economic conditions. Inflation control, stable energy costs, and a healthy balance of payments will remain critical in shaping monetary policy.
Additionally, the recent signing of the historic 2025 national budget by President Marcos is expected to play a significant role in supporting economic growth and poverty alleviation. With increased funding directed towards infrastructure, education, and social services, this budget aims to create a more resilient economic foundation amid ongoing monetary policy adjustments.
While economists expect measured rate cuts, fewer adjustments may occur if global financial conditions tighten unexpectedly. The BSP continues to balance inflation control with economic support, positioning itself to respond flexibly to evolving challenges while maintaining confidence in the stability of Philippine inflation trends.
