Inflation to average 3.2% in first quarter

Inflation is expected to average within the target range of the Bangko Sentral ng Pilipinas (BSP) in the first quarter, according to First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research.

“We expect inflation to go within the BSP target in Q1 (first quarter) when it averages some 3.2 percent,” FMIC and UA&P said in the Market Call report for January released yesterday.

They said the inflation outlook is partly due to a high base a year ago.

The two institutions said the inflation rate “could go even lower if other food prices remain soft.”

Last December, the headline inflation rate eased to 3.9 percent from the previous month’s 4.1 percent as utility and food prices posted lower growth.

Rice, the Filipinos’ staple food, however, registered a higher inflation rate of 19.6 percent in December from 15.8 percent in November.

“Despite elevated rice prices, we still think full year inflation would settle within the BSP target at 3.8 percent,” FMIC and UA&P said.

Inflation averaged six percent last year, higher than the 5.8 percent in 2022, and above the BSP’s target range.

FMIC and UA&P said the lower inflation rate should support consumer spending this year.

For this year, FMIC and UA&P expect the economy to post six percent growth, faster than their estimated 5.5 percent growth for 2023.

FMIC and UA&P’s growth forecasts for 2023 and 2024 are both below the government’s growth targets.

The government is aiming for 6.5 to 7.5 percent growth this year, and six to seven percent in 2023.

In the first nine months of the year, the economy grew by 5.5 percent.

FMIC and UA&P said this year’s growth will be supported by slower inflation, robust job numbers, and sustained infrastructure spending.