Overall, we now see very little upside risks to inflation aside from the threat of a regional war in the Middle East which may impact global supply of crude oil. However, this should be tempered by generally weaker demand for crude and the planned production increase from OPEC. <\/p>\n\n\n\n
As such, we are tempering our full-year inflation forecast from 3.5% to 3.3% while maintaining our 2025 forecast of 3.0%. We also acknowledge at this point that the faster-than-expected rate of disinflation may embolden the BSP to be more aggressive in its policy cuts, and we are opening the possibility of a total of 50bps (0.50%) worth of cuts until year-end 2024 instead of only 25bps (0.25%).<\/p>\n\n\n\n
September inflation prints at +1.9%<\/strong><\/p>\n\n\n\n The Philippine Statistics Authority (PSA) reported on Friday morning that September inflation cooled to +1.9% year-on-year (YoY), the lowest print since May 2020\u2019s +1.6%. A month-on-month decline of 0.24% in the consumer price index, coupled with favorable base effects, led to the extraordinary report which was significantly lower than the +2.5% expected by most analysts. <\/p>\n\n\n\n To recall, rice prices nearly doubled in September last year, leading to inflation jumping to +6.1%. However, it must be noted at this point that month-on-month increases in CPI from October to December 2023 were mostly benign, lowering the favorable base effects for the remaining months of 2024.<\/p>\n\n\n\n Food inflation pressures starting to ease<\/strong><\/p>\n\n\n\n Much of the decline in the September inflation can be attributed to food, which saw a slower YoY increase of 1.4% vs 4.2% in August. Rice inflation, in particular, cooled to +5.7% YoY and showed a decline of -0.1% MoM.<\/p>\n\n\n\n Note that rice prices remain elevated and there is still a lot of potential downside, especially with the national government putting all its efforts into boosting supply in order to get rice prices at least back to where they were in July 2023. Corn and vegetables also contributed to slower food inflation, with their price indices showing a month-on-month decline of 6.8% and 9.7% respectively. <\/p>\n\n\n\n In fact, most commodity groups under food exhibited MoM declines in their price indices as food supply starts to stabilize after the supply shocks brought about by the El Ni\u00f1o phenomenon earlier this year.<\/p>\n\n\n\n Better all around<\/strong><\/p>\n\n\n\n Transport and HWEGO (housing, water, electricity, gas & other fuels), which fueled the uptick in inflation a couple of months ago are also showing signs of stabilizing. The Transport price index declined by 2.4% YoY and 1.3% MoM on the back of lower pump prices. HWEGO, on the other hand, only ticked higher by 0.2% MoM and was up by 3.2% YoY vs +3.8% YoY in August.<\/p>\n\n\n\n