Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)
MANILA – The Bangko Sentral ng Pilipinas (BSP) forecast that inflation rate in July 2024 will settle between 4 and 4.8 percent.
The inflation rate projection is higher than last month’s 3.7 percent.
“Higher electricity rates along with the increased prices for agricultural commodities like vegetables, meat, and fruits along with higher domestic oil prices are the primary sources of upward price pressures for the month,” the BSP said in a statement Wednesday.
READ: Inflation cooled to 3.7% in June, slowest in 4 months
The central bank said the lower prices of rice and fruits as well as the appreciation of the Philippine peso are expected to offset the faster increase in prices of other commodities.
“Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation,” it said.
The government targets inflation to settle between 2 and 4 percent for 2024.
Meanwhile, Fitch Solutions unit BMI expected that consumer spending in the Philippines will grow to 6.2 percent this year from 5.1 percent in 2023 as inflation remains manageable although slightly elevated.
“For 2024, we expect an acceleration, driven mostly by easing inflationary pressures, a stable labor market, and lower interest rates,” the BMI said in its commentary on Wednesday.
On the other hand, risks to its forecast include prolonged inflation, lower remittances, and a weakening of the domestic economy.
The BMI projected that consumer spending will ease to 5.9 percent in 2025.
It also forecast inflation rate this year to settle at 3.2 percent before slowing down to 2.9 percent next year, which are still within the government’s target.