RISING electricity, rice, and fish prices are seen to have fueled inflation in October, according to the Bangko Sentral ng Pilipinas (BSP).
In its month-ahead inflation forecast, the BSP projected October 2025 inflation to settle within the range of 1.4 to 2.2 percent.
‘Upward price pressures for the month may stem from higher prices of rice, fish, vegetables, and electricity, as well as the depreciation of the peso,’ the BSP said.
However, these pressures could be partially offset by lower prices of oil, meat and fruits, the central bank added.
If inflation reaches 1.4 percent in October, this would be the lowest in three months since the 0.9 percent recorded in July. But if it turned out to be 2.2 percent, this would be the fastest in nine months or since the 2.9 percent posted in January.
The October 2025 inflation data will be released by the Philippine Statistics Authority (PSA) on November 5.
In September, inflation accelerated to 1.7 percent, faster than the 1.5 percent posted in August but was slower than the 1.9 percent recorded in September 2024.
‘Going forward, the BSP will continue to monitor evolving domestic and international developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation,’ the central bank said.
Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri Jr. said headline inflation likely rose to 1.8 percent in October on higher rice, vegetables and fish prices.
‘Additional upward pressure came from higher electricity rates and a weaker Peso, though these were partly tempered by declines in meat, fruit, and oil prices,’ Neri said.
However, upside risks are ‘building’ due to the fading favorable rice base effects and the extension of the rice import ban through the year-end, which could add pressure on rice prices, Neri added.
Still, inflation is expected to hover around 2.0 percent through December, before edging above 3.0 percent in the first half of 2026. This will be driven by base effects, wage increases and potential supply disruptions linked to trade policy, Neri said.
With this, the BSP could still deliver another 25-basis-point rate cut in December, Neri added, if the third quarter GDP data confirms the persistence of economic weakness.
BSP Governor Eli M. Remolona Jr. earlier hinted that the ‘Goldilocks rate’ has shifted closer to 4 percent from 5 percent, implying more room for monetary policy easing.
Beyond December, Neri said the central bank could lower interest rates by two more times in the first half of 2026, if growth continues to run ‘below potential.’
The BSP may also align its policy with the US Federal Reserve, especially if markets bet on aggressive US rate cuts after Chairman Powell’s term ends in May 2026.
‘However, such a strategy, if materialized, raises the risk of policy overshooting: if inflation pressures re-emerge once base effects turn unfavorable later in 2026, a reversal in policy could become necessary,’ Neri warned.
More rate cuts, however, may continue to weigh on the peso, Neri said, as markets price in narrower interest rate differentials versus the US.
The peso’s recent record weakness was driven by strong import demand and equity outflows, but holiday remittance inflows could provide temporary support, helping the peso end the year around P58.20 per dollar, Neri added.
The peso closed at P58.85 to the greenback on Thursday, after it opened at P58.73. It traded at its highest at P58.98 and at its lowest at P58.58.