Headline inflation likely crept higher in October due to pricier food and utilities, although price pressures remain broadly contained, according to a poll of economists.
Estimates from analysts showed the growth in consumer prices would be higher than the 1.7 percent recorded in September, but still below the two percent low-end target of the Bangko Sentral ng Pilipinas (BSP).
If inflation stays below two percent, it would mark the eighth consecutive month that it has remained within that range.
The Philippine Statistics Authority will release the official October inflation data on Nov. 5.
BPI lead economist Jun Neri said headline inflation likely rose to 1.8 percent in October, reflecting higher prices of rice, vegetables and fish. Additional upward pressure came from higher electricity rates and a weaker peso, although these were partly offset by lower prices of meat, fruits and oil.
‘Going forward, upside risks to inflation are building as favorable rice base effects fade and the extension of the rice import suspension through year-end adds further pressure,’ Neri said in a note.
He expects inflation to hover around two percent through December before edging above three percent in the first half of next year, driven by base effects, wage increases and possible supply disruptions linked to trade policy.
Neri noted that an influx of cheap Chinese exports could help temper some of these pressures.
Given the still benign inflation environment, BPI’s lead economist said the BSP may consider another 25-basis-point rate cut in December, especially if the third-quarter gross domestic product report ‘reinforces the view that economic weakness persists.’
Metrobank chief economist Nicholas Mapa likewise expects inflation to inch up to 1.9 percent this month, noting that downside pressure from rice may be offset by higher costs in other food items and utilities.
‘Inflation could tick higher on base effects in the coming months,’ Mapa said.
Reyes Tacandong and Co. senior adviser Jonathan Ravelas also sees inflation climbing to 1.8 percent year-on-year, citing ‘the same suspects of transport and some food items.’
In contrast, UnionBank chief economist Ruben Carlo Asuncion forecasts a slightly lower 1.6 percent, attributing it to base effects and modest price adjustments.
He said higher generation charges following Meralco’s rate adjustment and mild pressure from rice and select food items may be offset by fuel rollbacks and stable meat and vegetable costs under government monitoring.
‘Upside risks include the extended rice import suspension, further peso weakness and higher global oil prices,’ Asuncion said.
Despite the expected uptick, analysts agreed that inflation remains subdued and well below the BSP’s two to four percent target range.
Neri said expectations of further monetary easing could keep the peso under pressure, although seasonal inflows of remittances during the Christmas holidays should provide support, helping the peso end the year around 58.2 per dollar.
‘Looking beyond December, the BSP could still deliver up to two additional cuts in the first half of 2026 if growth continues to run below potential. The central bank may also align its policy path with that of the Federal Reserve, particularly if markets begin to price in aggressive US rate cuts,’ he said.
However, Neri cautioned that this could lead to policy overshooting, noting that if inflation pressures resurface once base effects fade later in 2026, the BSP may need to reverse course.
The Monetary Board slashed its benchmark rate by 25 basis points to 4.75 percent in October, marking its fourth straight rate cut this year. This brought the cumulative rate cuts to 175 bps since August 2024.