HIGHER domestic fuel prices and an increase in transport fares drove inflation in October to a near three-year high, the Philippine Statistics Authority (PSA) reported Thursday.
Consumer price growth accelerated to 7.8 percent in October, markedly up from 7.2 percent and 1.7 percent a month and year earlier, respectively.
This is the highest rate recorded since February 2023’s 8.6 percent and exceeded the 7.7-percent median in a Manila Times poll.
Bangko Sentral ng Pilipinas (BSP), however, said the headline figure is within its forecast range of between 7.1 percent and 8.1 percent and stressed that it is also consistent with its projection that “inflation is likely to remain elevated in the coming months.”
“The BSP will remain vigilant and guided by incoming data. It will continue to assess the impact of the latest developments in the Middle East and ongoing El Niño conditions on the outlook for inflation and growth,” BSP said in a statement.
The October figure brought average inflation for the first ten months of 2026 to 5.6 percent, remaining above the BSP’s 2.0- to 4.0-percent target range.
Core inflation, which excludes selected food and energy items, likewise rose to 5.4 percent from 4.8 percent in September and 2.5 percent a year earlier.
Higher transport, fuel costs tagged
National Statistician Dennis Mapa said inflation surged amid higher transport and fuel costs.
“The faster increases in the prices of (these) items contributed to the higher inflation rate for the transport sector,” Mapa said.
The transport index rose markedly to 20.1 percent during the month from 14.6 percent in September 2026.
A faster annual increase was also observed in the housing, water, electricity, gas and other fuels index at 9.3 percent in October 2026 from 8.4 percent in the previous month.
Food inflation, however, slowed to 6.4 percent last month from 6.8 percent in September 2026.
This was due to slower annual increases in the indices of fish at 5.0 percent during the month from 7.4 percent in September 2026, and in vegetables, tubers, plantains, cooking bananas and pulses at 5.7 percent in October 2026 from 10.5 percent in September 2026.
Rice inflation continued to increase to 20.7 percent from 20.3 percent in the previous month.
Socioeconomic Planning Secretary Arsenio Balisacan said that to address these pressures, the government is strengthening agricultural production and logistics while providing targeted assistance to sectors affected by higher energy costs.
“We will continue strengthening targeted interventions that support producers, improve supply, and provide relief to vulnerable sectors,” Balisacan said.
“By improving agricultural productivity and logistics and addressing constraints in food and energy supply, we can ease price pressures, protect purchasing power, and build greater resilience against external shocks,” he added.
Raises possibility of more rate hikes
ING Regional Head of Research Deepali Bhargava said while last month’s inflation came in strong, it remained within the central bank’s forecast, making it largely unsurprising.
“The BSP may prefer to assess the cumulative impact of past tightening before moving aggressively again,” Bhargava said.
“That said, a 25bps rate hike in December remains our base case, as the BSP is likely to maintain a cautious tightening bias and stay ahead of potential inflation risks and sticky core,” she added.
The BSP policymaking body Monetary Board has raised key policy rates by 50 basis points last month to contain inflation.
Chinabank Research also said that the latest inflation print “keeps the door open” for another quarter-point rate hike next month.
“However, much will depend on the Q3 GDP data, as further monetary tightening could further weigh on the already slowing economy,” Chinabank Research said.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said inflation could remain at 7 percent-8 percent levels for the rest of 2026 and up to around February 2027.
“Barring any new external and local shocks, inflation could ease to 5 percent-6 percent levels from March-December 2027, partly due to higher base effects, especially when the anniversary of the war on Iran and the Middle East starts in March 2027,” Ricafort said.
As a result, he said local monetary authorities may again “signal further monetary tightening at the next BSP rate-setting meeting on December 17, 2026.”
“As the inflation rate remains well above the 2 percent-4 percent target range of the BSP, monetary tightening is needed to better manage inflation, inflation expectations, and second-round inflation effects,” Ricafort said.
