By Katherine K. chan
There may be inflation in the Philippines There was a slight increase in October That's amid higher prices for food, fuel and electricity, as well as a weaker peso, analysts said.
A businessworld The survey of 17 analysts found an average estimate of 1.8% for the consumer price index in October. If realized, October inflation would have been slightly up from 1.7% in September, but slower than the 2.3% seen in the same month last year.
The average estimate also falls within the Bangko Sentral ng Pilipinas (BSP) 1.4-2.2% forecast for October.
It could also be the fastest clip in eight months or so since 2.1% in February and would be on par with 1.8% in March.
October could similarly be the eighth consecutive month when inflation has fallen below the BSP's 2-4% target.
The Philippine Statistics Authority is set to release October inflation data on November 5.
Aris D. Dekane, Association of Southeast Asian Nations economist at HSBC Global Investment Research, said inflation was likely to stabilize at 1.8% in October as vegetable prices rose after the typhoon.
“Electricity prices also increased due to the depreciation of the peso against the US dollar, which increased generation charges,” he said.
Manila Electric Co. raised total electricity rates by P0.2331 per kilowatt-hour (kWh) to P13.3182 per kWh in October.
Moody's Analytics economist Sarah Tan said there has been an increase in transportation and Fuel prices may also contributeInflation is expected to accelerate in October.
“Higher transportation and fuel costs, as well as weather-related disruptions affecting some food items, are putting mild pressure on prices,” he said in an e-mail.
In October, pump price adjustments resulted in a net increase of P1.80 per liter for gasoline, P2.10 per liter for diesel, and P1.10 per liter for kerosene.
“Fuel prices also remained stable; global oil prices eased in October, offsetting any inflationary impact brought by the weaker peso,” Mr Dekane said.
In October, the peso weakened against the greenback at P58.850 per dollar, slipping 65.4 centavos from P58.196 at the end of September. On October 28, the peso also reached a new all-time low of P59.13 against the greenback.
“Downward price pressure also continued (in October), with the biggest cooler being rice. The price of regular milled rice in Metro Manila remained stable at P39.4 per kilogram despite the ongoing import ban on the grain,” Mr. Decane said.
Bank of the Philippine Islands chief economist Emilio S. Neri, Jr. said that lower prices for meat, fruits, and oil also could have prevented inflation from rising further.
“Going forward, the risk of inflation rising as the favorable rice base effect wanes and the extension of the rice import suspension through the end of the year adds further pressure,” Mr Neri said.
President Ferdinand R. Marcos, Jr. had previously ordered the suspension of rice imports for 60 days beginning on September 1 to support Filipino farmers during the harvest season and stabilize rice prices.
The suspension was originally scheduled to end on November 2, but is now expected to be extended until the end of 2025. This restriction applies only to imports of regular milled and well milled rice.
sticky core inflation
Meanwhile, analysts said core inflation is expected to remain “sticky.”
“This is partly driven by stronger inflation expectations and recent wage increases. Additionally, the peso has broadly weakened since June, hurting services and other core components as companies adjust prices to reflect higher costs,” Ms Tan said.
Core inflation, which excludes volatile food and fuel prices, eased to 2.6% in September from 2.7% in August. It averaged 2.4% over the nine-month period, compared to 3.1% in the same period a year ago.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in an email that he expected core inflation to remain close to that level in October.
“This stickiness suggests that underlying demand-side pressures and second-round effects (e.g., wage adjustments, service costs) persist despite low headline inflation. This indicates that deflation is largely driven by volatile commodities, while structural price components remain stable,” Mr. Asuncion said.
Security Bank Chief Economist Angelo B. Taningco said in an email that core inflation is likely to remain elevated in the coming months amid holiday-inspired spending.
Meanwhile, Maybank Investment Bank economist Azril Rosli said core inflation could remain between 2.5% and 3% through December.
“(Such) labor market tightening over the holiday season, incorporating (year-to-date) inflation expectations into the annual rent adjustment cycle, incorporating utility costs into business operating expenses, continued school year 2025-2026 tuition adjustments, health care cost pressures from pharmaceutical imports impacted by peso weakness, and the BSP's accommodative monetary policy are expected to continue,” he said in an e-mail note.
below 2% inflation
Despite emerging risks, analysts still expect full-year inflation to remain below the central bank's 2-4% target band.
“Looking ahead, inflation is expected to remain manageable, staying on average below the BSP's 2-4% target this year and around the midpoint of the target range next year,” ChinaBank Research said in an e-mail.
If the 1.8% averaging projection materialises, headline inflation over the 10-month period will average 1.7%, matching the BSP's target for the year.
For 2026, the central bank sees inflation rising to 3.1%, before slowing to 2.8% in 2027.
“Despite a modest increase in the fourth quarter, full-year inflation is likely to remain below the BSP's 2-4% target range due to softening global commodity prices, improving domestic food supply and policy support and subdued demand conditions,” Mr Asuncion said.
Analysts said this expectation gives the central bank room to continue its accommodative monetary policy through the end of the year and potentially into 2026.
Oikonomia Advisory & Research, Inc. “We do not expect the central bank to deviate much from its planned monetary policy easing path, especially if economic growth remains subdued,” Reniel Matt M. Ares, an economist at the U.S. Bank of America, said in a Viber message.
Last month the monetary board cut its benchmark policy rate by 25 basis points (bps) to 4.75%, the lowest in three years. Its cumulative cuts reached 175 bps since the start of its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. plans a 25-bp cut at the Monetary Board's last meeting on December 11 this year and potentially more cuts in 2026 as he seeks to support the economy amid weak business sentiment due to the flood control scandal.
“Looking beyond December, the BSP could still make two additional cuts in 1H 2026 if growth continues to run below potential,” said BPI's Mr Neri. “The central bank may align its policy path with that of the Federal Reserve, especially if markets begin to anticipate aggressive US rate cuts after Chairman Powell's term ends in May 2026.”
Last week, the Fed made its second 25-bp cut this year, bringing its interest rates to a range of 3.75-4%. This takes its cumulative reduction to 150 bps from September 2024.
However, Fed Chairman Jerome H. Powell hinted at a pause at its next rate-setting meeting this year, citing the risk of unavailability of economic data due to the ongoing US government shutdown.
