Inflation to ease to 2.5% in September, Moody's Analytics

Headline inflation will likely ease to 2.5% year-on-year in September, down from 3.3% recorded the previous month, as favorable base effects will impact consumer prices, Moody's Analytics said in its Weekly Review.

According to the report, price pressures are expected to slow down on rice, which makes up a significant proportion of the heavily weighted food component of the consumer price index (CPI).

"Prices for the staple soared in 2023 when India banned the export of nonbasmati white rice. A tariff cut on imported rice, which took effect at the end of June and will last until year's end, will help bring down inflation for this staple," Moody's Analytics added.

However, the weekly review said an impending electricity rate hike would keep utilities inflation heated in the coming months.

The report by Moody's Analytics echoes the Asian Development Bank (ADB) forecast of an easing inflation.

In addition to lowering inflation, the ADB added that monetary easing, and sustained public spending, particularly on major infrastructure projects, will support Philippine economic growth this year and the next,

In its September 2024 Asian Development Outlook (ADO) report, ADB maintained its growth forecast for the Philippine economy at 6.0% for 2024 and 6.2% in 2025. The report said broad-based domestic demand will drive the expansion in gross domestic product (GDP), supported by lower inflation and interest rates.

ADB lowered its inflation forecast to 3.6% in 2024 from its April estimate of 3.8%, reflecting the sustained deceleration in food prices partly due to lower tariffs on rice imports. Inflation is expected to ease further to 3.2% in 2025 compared to the previous estimate of 3.4%.

"Most of the ingredients for the Philippines' sustained economic growth are in place—rising government revenues are boosting public expenditures on infrastructure and social services, increasing employment is driving consumption, and reforms to open the economy to more investments are underway. With inflation slowing, the country is in a strong position to lead growth in Southeast Asia," said ADB Philippines Country Director Pavit Ramachandran.