Economists predict 2024 inflation to ease to 3.5%

Private sector economists have revised their 2024 inflation forecast for the Philippines to 3.5%, down from the previous estimate of 3.7%, according to a Bangko Sentral ng Pilipinas (BSP) survey. The adjustment reflects balanced risks to inflation, aided by a stronger peso and favorable base effects.

BSP's latest Monetary Policy Report, based on its August survey of external forecasters, indicates that inflation expectations remain well-anchored. Analysts forecast inflation to stay within the 2-4% target range over the next three years. The outlook for 2025 was revised to 3.1%, down from 3.5%, and 2026 projections were lowered to 3.2%.

While downside risks like lower rice prices and a stronger peso were highlighted, potential spikes in electricity costs from rising oil prices remain a concern. Despite these risks, economists maintain confidence in inflation's downward trend, with an 86.4% probability that it will stay within the target range in 2024.

The report also suggests a total policy rate cut of 50 basis points by the end of 2024, with further reductions expected through 2026.