Metrobank: Inflation expected to decline due to government remedies

Headline inflation may fall within target again in July, reaching 3.8%, with price pressures fading at a more favorable pace to start the second half of the year. Earlier in the year, the Bangko Sentral ng Pilipinas (BSP) had forecast inflation to potentially breach the upper end of the inflation target.

However, receding risks from the El Niño weather phenomenon plus improved supply dynamics due to government remedies should keep price pressures at bay. The reduction in tariff for imported rice and the extension of an executive order lowering tariffs for important food commodities are some examples of such supply side remedies.