Headline inflation will likely settle at 2.6 percent this month, well within the government’s 2 percent to 4 percent target range, due to lower rice prices, an economist said.

“Inflation could remain relatively benign and still well within the BSP’s inflation target of 2 to 4 percent, largely due to lower rice prices, which account for 9 percent of the CPI (consumer price index) basket due to lower tariff on imported rice,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

Headline inflation settled at 2.5 percent in November.

Rice was a significant driver of inflation since September 2023.

To reduce rice prices, President Ferdinand R. Marcos Jr. signed and issued Executive Order (EO) 62, series of 2024 on the Comprehensive Tariff Program 2024-2028 on 20 June.

Implemented in July, the EO included reducing the tariff on imported rice from 35 percent to 15 percent, which contributed to some moderation in retail rice prices in the local market.

As of November, rice inflation continued its downtrend to 5.1 percent from 22.5 percent in June.

Aside from lower rice prices, Ricafort said, global crude oil prices also hovered among 2.5-month lows.

“Other major global commodity prices are among the lowest in 3 to 4 years amid softer economic data in China, which is the world’s second biggest economy and biggest importer of oil and other major global commodities,” he said.

“This would help support relatively benign inflation in many countries around the world, at or near central bank inflation targets that could help justify future Fed rate cuts that could be matched locally.”

Ricafort, however, said seasonal increase in demand and spending for the Christmas holiday season could lead to some uptick in prices.

December 2024 inflation data will be released by the Philippine Statistics Authority in the first week of January.

“For the coming months, it is possible for inflation to sustain at 2 percent levels up to early 2025, or well within the Bangko Sentral ng Pilipinas’ inflation target range of 2 to 4 percent,” Ricafort said.