FILIPINOS may face another quarter of elevated prices as inflation is expected to remain above 8 percent through December driven by higher global oil prices, rising rice costs and weaker peso.
“We expect inflation to remain above the 8 percent year-on-year level in the last quarter of 2026,” the economic and financial research arm of Australia and New Zealand Banking Group Limited (ANZ), ANZ Research, said in its latest commentary.
It expects inflation to have accelerated to 8.4 percent year-on-year in October, up from 7.2 percent in September, marking a second consecutive month of faster price increases.
This is markedly higher than the 7.2 percent recorded in September and remained above the 2.0 to 4.0 percent target of the government.
If realized, it will be the highest inflation rate to be recorded since January 2023’s 8.7 percent.
ANZ said crude oil prices had climbed to six-month highs by the end of October, a development expected to keep domestic fuel prices elevated and add to transportation and other operating costs.
“Rice price growth has also accelerated, adding further upward pressure to food prices,” ANZ said.
“The weaker peso has added another layer of risk to the food inflation outlook as the Philippines is a net food importer,” it added.
The peso remained above P60 to a dollar and has been depreciating further. It reached a historic low of P64.17 on Oct. 28 and touched an intraday low of P64.18 the following day.
The combination of elevated energy prices, higher rice costs and exchange-rate pressures could keep inflation above 8 percent throughout the fourth quarter, ANZ said, extending the squeeze on household purchasing power.
The Philippine Statistics Authority is scheduled to release the official October inflation figures on Nov. 5.
BSP Governor Eli Remolona Jr. said inflation could increase further in the coming months, with the central bank expecting it to hit within 7.1 and 8.1 percent range last month.
The BSP maintained its inflation forecast at 6.1 percent for this year but raised it to 6 percent for 2027 from 5.4 percent previously. It kept its inflation estimate at 3.3 percent for 2028.
With the expected higher inflation, the BSP policymaking body Monetary Board has raised its key policy rates by 50 basis points at its October meeting, bringing the cumulative hikes to 125 bps since April.
Benchmark rates now stand at 5.5 percent.
ANZ said the central bank would likely maintain a tightening bias, particularly as government spending shows signs of strengthening.
It expects two more rate hikes, one for December and another in the first quarter of 2027. This would bring rates higher at 6.0 percent.
“Fiscal support is showing signs of strengthening, with growth in current expenditure improving over the past few months and the contraction in capital outlays moderating,” ANZ said.
“As fiscal support to the economy gains momentum, the BSP is likely to maintain a tightening bias,” it added.
