The January 2025 inflation of 2.9 percent is within the BSP’s forecast range of 2.5 to 3.3 percent. The latest inflation outturn is consistent with the BSP’s assessment that inflation will remain anchored to the target range over the policy horizon. The rice tariff reduction and negative base effects are expected to support disinflation.
The balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates. The impact of lower import tariffs on rice remains as the main downside risk to inflation. Domestic demand is likely to remain firm but subdued. Private domestic spending is expected to be supported by easing inflation and improving labor market conditions. However, uncertainty in the external environment could temper economic activity and market sentiment.
The BSP will continue to closely monitor the emerging developments and risks to the inflation outlook. This will be discussed in the upcoming monetary policy meeting on 13 February 2025. Looking ahead, the Monetary Board will maintain a measured approach to monetary policy easing to ensure price stability conducive to sustainable economic growth and employment.