INLATION may have accelerated further in October as higher transport, fuel and food costs, coupled with the weakening peso, added to price pressures, economists said, potentially prompting the Bangko Sentral ng Pilipinas (BSP) to raise interest rates again in December.
The median forecast in a Manila Times poll of economists placed October inflation at 7.7 percent, significantly higher than the 1.7 percent recorded in the same month last year and the 7.2 percent posted in September.
The Philippines’ headline inflation or overall inflation in September 2026 was higher from the 6.1 percent in August 2026. This brings the average inflation rate from January to September 2026 to 5.4 percent.
The Philippine Statistics Authority said the uptrend in the overall inflation rate in September 2026 was primarily influenced by the faster annual increment in the heavily weighted food and non-alcoholic beverages at 6.7 percent during the month from 4.6 percent in August 2026.
Also contributed to the uptrend of the overall inflation were the faster annual increases in September 2026 observed in housing, water, electricity, gas and other fuels index at 8.4 percent and transport index at 14.6 percent from their respective annual growth rates of 7.9 percent and 13.5 percent in the previous month.
The Philippine Statistics Authority is scheduled to release the official inflation data on Nov. 5.
BSP to remain vigilant
The median projection falls at the middle of the BSP’s inflation forecast range of between 7.1 and 8.1 percent for October.
The central bank said it would “remain vigilant and guided by incoming data, particularly on inflation and growth prospects.”
“It will continue to assess the impact of the latest developments in the Middle East on the country’s inflation and economic outlook,” it added.
Pantheon Macroeconomics economist Miguel Chanco expected inflation to pick up modestly to 7.3 percent in October, as higher transport costs were partly offset by easing food inflation.
“I’m expecting to see only a modest uptick in headline inflation for October,” Chanco said.
“This acceleration will be down primarily to a continued increase in transport inflation on the back of the ongoing rise in fuel prices, with some of this uplift offset partially by a likely small downtick in food inflation,” he added.
Faster acceleration
Philippine National Bank economist Alvin Arogo, meanwhile, projected inflation to accelerate to 7.4 percent in October and peak at 7.6 percent in February next year.
Rizal Commercial Banking Corp. chief economist Michael Ricafort also expected inflation to rise, forecasting a rate of 7.6 percent as peso depreciation increased import costs.
He added that “higher minimum wages in Metro Manila and in other regions that could lead to higher prices of affected goods and services” may have caused the uptick.
Bank of the Philippine Islands lead economist Emilio Neri Jr. said inflation could have reached 7.7 percent as earlier price shocks increasingly affect other parts of the economy, including transport fares and wages.
He added that higher import costs were also contributing to upward price pressures.
The wider depreciation of the peso raised the cost of fuel, food imports, and USD-denominated power supply contracts, Neri said.
Neri cautioned that inflation might not have peaked this year, with further increases expected in the coming months.
“We expect it to come in November, when inflation could exceed 8 percent if current price pressures persist,” Neri said.
Further rate hikes
“Further rate hikes may be necessary to support the local currency, contain second-round effects, and anchor inflation expectations before price pressures become more deeply embedded,” Neri added.
Chinabank economist Domini Velasquez, UnionBank chief economist Ruben Carlo Asuncion and Metrobank chief economist Nicholas Antonio Mapa had the highest October inflation forecast among the economists surveyed, at 7.8 percent.
Velasquez attributed the expected acceleration to higher transport fares and electricity costs, alongside mounting food price pressures.
She said bus, jeepney and taxi fares increased following adjustments approved in late September, while higher electricity rates, particularly in areas serviced by Manila Electric Co. (Meralco), added to inflation.
Velasquez also projected core inflation to rise to 5.4 percent, “suggesting that underlying price pressures continue to broaden.”
“Inflation is expected to accelerate further and peak in November as El Niño adds to food price pressures,” Velasquez said.
Asuncion, meanwhile, said the weaker peso was raising the cost of imported fuel, food and other goods, while lingering supply-side pressures continued to keep inflation elevated.
“Food remains an important contributor, although prices of some agricultural commodities showed signs of easing in early October,” Asuncion said.
He added that further peso depreciation, higher global oil and commodity prices, weather-related supply disruptions and stronger second-round effects could prolong elevated inflation.
Mapa, meanwhile, pointed to supply-side pressures, particularly from rice, meat, fish and energy-related products, as key factors driving inflation higher.
“As such, BSP will likely revert to measured pace of tightening to balance inflation fight with avoiding weighing too much on floundering growth momentum,” Mapa said.
