DBS lowers Philippine inflation forecast to 1.7%

SINGAPORE-BASED DBS Bank slashed its inflation forecast for the Philippines for 2025, with expectations of further policy easing for the remainder of the year.

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"Moderation in food price has helped to soften inflation, with the contribution of services also off the boil. Broad-based deceleration provided the backdrop for the BSP to unwind tightening moves from 2022-23," DBS Senior Economist Radhika Rao said in a commentary.

DBS now expects Philippine headline inflation to settle at 1.7% this year, much lower than its previous forecast of 2.6%.

Headline inflation sharply eased to a near six-year low of 0.9% in July from 1.4% in June and 4.4% a year ago. This also marked the fifth straight month that inflation settled below the central bank's 2-4% target range.

For the first seven months of the year, inflation averaged 1.7%.

The Bangko Sentral ng Pilipinas (BSP) expects inflation to average 1.6% this year.

"Inflation for the bottom 30% of income households has been receding, led by food costs, signaling relief on household expenses," Ms. Rao said.

Inflation for the bottom 30% of income households slipped to 0.8% from the 0.4% dip in June.