Image from Philippine Daily Inquirer/ANN
MANILA (Philippines Daily Inquirer/ANN): Headline inflation will likely settle at 2.6 per cent this month, well within the government’s 2 per cent to 4 per cent target range, due to lower rice prices, an economist said.
“Inflation could remain relatively benign and still well within the BSP’s inflation target of 2 to 4 per cent, largely due to lower rice prices, which account for 9 per cent of the CPI (consumer price index) basket due to [a] lower tariff on imported rice,” Rizal Commercial Banking Corp. chief economist Michael Ricafort told the Philippine News Agency in a Viber message on Wednesday.
Headline inflation settled at 2.5 percent in November.
Rice has been a significant driver of inflation since September 2023.
To reduce rice prices, President Ferdinand R. Marcos Jr. signed and issued Executive Order (EO) 62, series of 2024 on the Comprehensive Tariff Program 2024-2028 on June 20.
Implemented in July, the EO includes reducing the tariff on imported rice from 35 per cent to 15 per cent, which contributed to some moderation in retail rice prices in the local market.
As s of November, rice inflation continued its downtrend to 5.1 per cent from 22.5 per cent in June.
Aside from lower rice prices, Ricafort said, global crude oil prices also hovered among 2.5-month lows.
Other major global commodity prices are among the lowest in 3 to 4 years amid softer economic data in China, which is the world’s second-biggest economy and biggest importer of oil and other major global commodities,” he said.
“This would help support relatively benign inflation in many countries around the world, at or near central bank inflation targets that could help justify future Fed rate cuts that could be matched locally.”
Ricafort, however, said a seasonal increase in demand and spending for the Christmas holiday season could lead to some uptick in prices.
December 2024 inflation data will be released by the Philippine Statistics Authority in the first week of January.
“For the coming months, it is possible for inflation to sustain at 2 per cent levels up to early 2025, or well within the Bangko Sentral ng Pilipinas’ inflation target range of 2 to 4 per cent,” Ricafort said. - Philippine Daily Inquirer/ANN
