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The BSP’s latest baseline projections continue to suggest a gradual return of inflation to the target of 2.4 per cent over the policy horizon, the bank said in a release.
Average inflation for this year is projected to settle at 5.4 per cent, slightly lower than 5.5 per cent earlier, while the average inflation forecast for 2024 now stands at 2.9 per cent from 2.8 per cent. For 2025, inflation is expected to average at 3.2 per cent.
Both headline and core inflation decelerated further in May due mainly to slower increases in the prices of food and energy-related items, affirming expectations of a return to the target range by year’s end.
However, the balance of risks to the inflation outlook continues to lean towards the upside due to the potential impact of additional transport fare increases and minimum wage adjustments, persistent supply constraints of key food items, El Nino weather conditions and possible knock-on effects of higher toll rates on agricultural prices, the bank said.
Meanwhile, the impact of a weaker-than-expected global economic recovery remains the primary downside risk to the outlook.
While the domestic growth momentum is expected to remain intact over the near term, recent demand indicators suggest a likely moderation in economic activity over the policy horizon.
Fibre2Fashion News Desk (DS)