THE Central Bank is looking at a 5.5 to 6.5 percent inflation forecast range for August as it gauges how recent weather disturbances alongside the elevated fuel costs weighed on the prices of food.
In a statement on Friday, the Bangko Sentral ng Pilipinas (BSP) said it projects August 2026 inflation to settle within the range of 5.5 to 6.5 percent.
‘Upward price pressures for the month are likely to be driven by higher rice, vegetable, fruit, and fish prices, partly due to unfavorable weather conditions, and elevated domestic fuel costs,’ the BSP said.
However, the central bank explained that upward pressures are expected to be mitigated by lower prices of meat, as well as lower electricity rates and the peso appreciation.
For this year, this is the third straight month that the central bank pegged a wider-than-usual month-ahead inflation forecast range, with the lower and upper bound of the range having a 1-percentage-point difference.
Should inflation in August hit the lower end of the range or 5.5 percent, it would mean that the increase in the prices of goods and services eased to the slowest in five months or since March 2026.
However, if inflation shoots up to the upper end of the Central Bank’s forecast range at 6.5 percent, this would have marked the end of inflation’s downtrend, particularly the highest reading in three months or since May 2026 when inflation was at 6.8 percent.
Moving forward, the central bank said it ‘will remain vigilant and guided by incoming data, particularly on inflation and growth prospects.’
‘It will continue to assess the impact of latest developments in the Middle East and recent weather disturbances on the country’s inflation and economic outlook,’ the BSP also noted.
Inflation has eased for the third straight month in July at 6.2 percent.
The downtrend started after it eased from the 7.2 percent peak in April to 6.8 percent in May, slowing further to 6.4 percent in June.
Sought for comment last month, Philippine Institute for Development Studies (PIDS) Senior Research Fellow John Paolo R. Rivera explained to the BusinessMirror that a wider forecast range ‘suggests greater uncertainty around the inflation outlook.’
For this year, these were the BSP’s month-ahead inflation forecasts: January, 1.4 to 2.2 percent; February, 2.3 to 3.1 percent; March, 3.1 to 3.9 percent; April, 5.6 to 6.4 percent; May, 7.1 to 7.9; June, 6 to 7 percent, and July 5.6 to 6.6 percent.
The actual headline inflation rates for this year were the following: January, 2 percent ; February, 2.4 percent; March, 4.1 percent; April, 7.2 percent; May, 6.8 percent; June, 6.4 percent; and 6.2 percent in July, data from the Philippine Statistics Authority (PSA) showed.
During its August 27 monetary policy meeting, the Monetary Board, the highest policy-making body of the BSP, revised downwards its inflation forecast for 2026 to 6.1 percent from its 6.4 percent forecast during its June 18 policy meeting.
However, it raised its inflation forecast to 5.4 percent for 2027, compared to the 4.5 percent forecast last June 18.
BSP Assistant Governor for Monetary Policy Sub-Sector Rogelio V. Mercado Jr. said: ‘The 6.1-percent inflation is of course driven by lower-than-expected inflation in June and July, as well as declining oil prices. This would be partly offset by the impact of El Niño on rice prices in the fourth quarter.’