MANILA: Consumer prices may have risen at their fastest pace in more than three years in October, driven by higher food and oil costs as well as increased transport fares, adding to pressure on the central bank to raise interest rates further.
Inflation likely accelerated to 7.6% year-on-year last month, based on the median estimate of 19 economists polled by the Philippine Daily Inquirer.
If realised, this would be the fastest pace since February 2023, when inflation reached 8.6%. It would also mark an acceleration from September’s 7.2%.
The projection fell within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 7.1% to 8.1% for October.
Both the economists’ consensus and the central bank’s estimate suggested that inflation remained well above the government’s 3% target.
Kausani Basak, foreign exchange analyst at ANZ Research, projected inflation would rise by as much as 8.4% in October, citing elevated oil prices and more expensive food, particularly rice.
The peso’s continued weakness, having recently breached the 64-per-US dollar level, posed another risk to the inflation outlook, she added.
“We expect inflation to remain above the 8% level in the last quarter of 2026 due to these above-mentioned factors,” Basak said.
Jun Hao Ng, an assistant economist at Oxford Economics, said that prices of agricultural products had risen across several categories, while domestic fuel prices also edged higher during the month.
“These pressures are also likely to have spilled over into the broader inflation basket, pushing core inflation higher,” Ng said.
“These risks could prompt the BSP to pursue a more aggressive or prolonged monetary tightening cycle.”
On Oct 22, a “strong majority” of the BSP’s monetary board voted to raise the benchmark interest rate by half a percentage point to 5.5%, citing the need for a stronger response to persistent inflation pressures.
The central bank expects inflation to average 6.1% this year, considerably above its 3% target.
It also raised its inflation forecast for 2027 to 6% from 5.4%, although it expects price growth to ease to 3.3% in 2028. — The Philippine Daily Inquirer/ANN
