Headline inflation will likely continue to decelerate in the coming months and might settle within the government’s 2 to 4 percent target as early as this month, an economist said on Friday. “Headline inflation [is] still expected to ease year-on-year for the coming months due to higher denominator effect,” Rizal Commercial Banking Corporation senior economist Michael Ricafort said in an interview with the Philippine News Agency. Ricafort said headline inflation might settle at 4-percent level for August to September this year and might further decelerate to 3-percent level in the fourth quarter of this year. “Thus, [it’s] possible to still achieve the government’s target range for inflation,” he said. Inflation decelerated to 4.7 percent in July, significantly lower than the 8.7 percent recorded in January this year. Ricafort, however, said risks to inflation include the increase in global crude oil prices and the damage caused by the combined effects of typhoon Egay and the southwest monsoon. “Global crude oil prices would also be another variable as an external risk factor that could lead to some uptick in prices for the rest of 2023 and beyond,” he said. Ricafort added that the recent storm damage led to higher prices of rice, vegetables, and other agricultural products. “The hard hit areas include Northern and Central Luzon, especially by floods, since these are among the country’s biggest producers of rice, corn, vegetables, and other agricultural products,” Ricafort said. “Headline inflation for August 2023 and for the coming months could still ease but to a lesser extent, also offset by still higher base effects that supported the disinflation trend in recent months,” he added. For the first quarter of 2024, Ricafort expects inflation to fall below 2 percent and normalize higher toward 3.5 percent in the latter part of 2024.
Source: Philippines News Agency
