Headline Inflation Back Inside Target Band, But Some Pockets Of Services Strength

Philippines Dec CPI came in slightly below the consensus at 3.9% y/y, (4.0% forecast). It was within the market forecast range and that of the BSP as well though.

• In y/y terms, we continue to see downside momentum. We are now back to early 2022 levels and back within side the BSP target range (2-4%).
• Core inflation also continues to ease, back to 4.4%y/y, after peaking at 8% in March 2023.
• Nearly all sub categories saw either slower or the same y/y momentum as Nov. The exception was transport, which rose to 0.4% y/y (from -0.8%).
• The m/m headline was 0.2%, same as Nov. There were some m/m gains, most notably in food, restaurants and personal care. The BSP will be watching for signs of any renewed momentum in services related inflation.
• Dec rice supply rose nearly 20% y/y, highs back to 2009. The authorities are looking at introducing more measures to ease pressure in this space (rice tariff on impacts may be cut more, BBG).