Economists expect the Bangko Sentral ng Pilipinas, or BSP, not to touch the policy rate which is now at 6.5 percent in its scheduled meeting next week as it continues to apply a break on inflation to within a target range of 2 percent to 4 percent.

HSBC economist Aris Dacanay said this is supported by high prices of rice and utilities have yet to decline substantially.

“Inflation risks are also tilted to the upside as utility rates were recently hiked and with rice prices still very elevated,” Dacanay said.

The Philippine Statistics Authority reported rice prices last month rose to 22.6 percent from 19.6 percent in December.

On the contrary, rice inflation increased further to 22.6 percent during the month from 19.6 percent in December 2023.

This tempered inflation downtrend to 2.8 percent from 3.9 percent month-on-month.

Dacanay said inflation might quicken again to 4 percent in the next months due to other risks.

“There are also pending petitions to hike wages and jeepney fares, two policies that could stoke another inflation wave if enacted simultaneously,” he said.

Metrobank’s analysts see average inflation to settle at 4.3 percent due to these risks.

“There continues to be strong upward inflation pressure for the year due to the impending effects of El Niño on food items, and emerging geopolitical risks,” the bank said.

Second, economists said the economy will likely remain robust compared to neighboring countries, signaling elevated inflation rates due to strong consumer demand for goods and services.

The Philippine gross domestic product rose by 5.6 percent last year, driven by higher private consumption at 5.3 percent in the fourth quarter last year from 5.1 percent in the third quarter.