Philippine Inflation Falls to 5-Year Low, Opening Door for Further Rate Cuts

The Philippines’ inflation rate dropped to its lowest level in over five years in April, driven by falling food and transport prices, the Philippine Statistics Authority said Tuesday. The slowdown strengthens the case for the Bangko Sentral ng Pilipinas (BSP) to continue easing monetary policy to support economic growth.

Headline inflation eased to 1.4% in April, down from 1.8% in March—the lowest reading since November 2019. This brought the year-to-date average to 2.0%, aligning with the bottom end of the BSP’s 2.0%–4.0% target range for 2024.

"The more manageable inflation outlook and the downside risks to growth allow for a shift toward a more accommodative monetary policy stance," the BSP said.

Last month, the central bank resumed its easing cycle with a 25-basis point rate cut, bringing the benchmark rate to 5.5%. Policymakers signaled more cuts ahead in measured “baby steps” to boost the economy amid global uncertainties.

The decline in April was largely due to a 10.9% year-on-year drop in rice prices, accelerating from March’s 7.7% fall, and a 2.1% decline in transport costs, sharper than the 1.1% decrease the month prior.

Core inflation, which strips out food and energy items, held steady at 2.2%, indicating underlying price pressures remain stable.

The government will release first-quarter GDP data on May 8, which could further influence monetary policy decisions ahead of the BSP’s next policy meeting on June 19.

The latest inflation print offers the BSP flexibility to balance price stability with growth, as it navigates evolving global and domestic headwinds.