Philippine inflation surged back to a three-year high of 7.2 percent in September as adverse weather and rising global oil prices fueled increases in food, utility, and transport costs.
The latest print, according to the Philippine Statistics Authority, blew past the 6.1-percent rate logged in August, snapping four consecutive months of easing.
It matched the rate recorded in April, when inflation was at its highest since March 2023’s 7.6 percent.
The September figure was also faster than the 6.8-percent median estimate of 19 economists polled by the Inquirer last week but remained within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 6.4 percent to 7.4 percent.
Average inflation from January to September is now at 5.4 percent, once again breaching the BSP’s 3-percent target.
State statisticians said food inflation accelerated to 6.7 percent from 4.6 percent, driven by vegetable prices rising 10.7 percent from a 3.4-percent decline in the previous month. Rice inflation also soared to an over two-year high of 20.3 percent from 19.4 percent.
This came as back-to-back enhanced monsoon rains damaged crops and harvests, with the government saying Tropical Cyclones ‘Luis,’ ‘Maymay,’ ‘Neneng’ and ‘Pilandok’ had damaged P4.38 billion worth of agricultural produce nationwide.
Meanwhile, inflation in housing and utilities rose to 8.4 percent from 7.9 percent on higher rent, electricity and cooking gas prices.
Transport prices also continued to increase, with inflation in the basket jumping to 14.6 percent from 13.5 percent as gasoline and diesel prices once again shot up.
As it is, domestic pump prices rose three times in September amid renewed tensions in the Middle East, which drove global oil prices past $100 per barrel anew.
Carlo Asuncion, chief economist at UnionBank of the Philippines, said the inflation surge was likely to be broader than seasonal as core inflation, which strips out volatile food and energy prices, rose to a nearly three-year high of 4.7 percent.
‘Looking ahead, the emergence of a Super El Niño could prolong supply constraints in agriculture, potentially affecting crop yields, water availability, and food production,’ Asuncion said.
‘As a result, inflation risks remain tilted to the upside over the coming months, and while some volatility is typical during the latter part of the year, sustained weather disturbances could keep food inflation elevated and push overall inflation higher than currently expected,’ he added.
Meanwhile, economists at Chinabank pointed out that the Super El Niño, compounded by transport fare hikes, will likely push inflation to peak in November.
‘More provinces are projected to experience reduced rainfall beginning this month. Beyond potentially reducing agricultural output and driving food prices higher, drier conditions could also strain water supply and power generation, leading to higher utility costs,’ they added.
In a statement, Socioeconomic Planning Secretary Arsenio Balisacan said the government was already working on targeted interventions to mitigate the impact of these headwinds on households.
‘The best response to supply-driven inflation is to strengthen supply itself. That is why we are expanding food production and storage, improving logistics, and building resilience against climate shocks,’ Balisacan said.
More rate hikes
Jonathan Ravelas, senior adviser at Reyes Tacandong and Co., said the central bank may deliver a half-percentage point rate hike, arguing that the rise in both headline and core inflation could mean that price pressures are broadening beyond food and fuel.
‘The immediate priority is to address supply-side constraints, particularly in food and energy, before inflation becomes more entrenched across the economy,’ Ravelas said.
Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said the BSP could opt for another 25-basis-point rate hike in October, followed by another increase of the same size in December. The tightening campaign could potentially continue until next year, he added.
‘Additional rate hikes during the first half of 2027 remain possible, with the policy rate potentially reaching 6 percent depending on the extent of El Niño’s impact on inflation,’ Neri said.
To contain inflation, the BSP has raised its benchmark interest rate by a quarter percentage point three times since April, bringing it to 5 percent. In a statement yesterday, the BSP said it remains vigilant and guided by incoming data.
‘It will continue to assess the impact of latest developments in the Middle East and weather disturbances on the outlook for inflation and growth,’ the central bank added.