By Katherine K. Chan
HEADLINE INFLATION may have eased year on year in October despite elevated prices of selected commodities and the peso’s recent weak performance, the Bangko Sentral ng Pilipinas (BSP) said.
Based on the central bank’s month-ahead forecast, inflation likely settled between 1.4% and 2.2% in October, slower than the 2.3% print in the same month a year ago.
At the upper end of the forecast, inflation likely accelerated from 1.7% in September and would be the fastest clip in nine months or since the 2.9% clip in January.
At the bottom end of the forecast, inflation could have hit a three-month low or since 0.9% in July.
“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 in a statement on Thursday.
The peso breached the P59 level on Tuesday, slipping by 23 centavos to P59.13 per US dollar from its P58.90 finish on Monday. This was a new all-time low for the peso, exceeding the previous record of P59 on Dec. 19, 2024.
Data from the Department of Agriculture (DA) showed the average price of local regular milled rice slipped by 1.3% to P37.30 per kilo in the Oct. 20-25 period from P37.79 per kilo a month ago. Well-milled rice also declined by 0.9% month on month to P42.72 per kilo from P43.10, while special rice fell by 0.3% to P56.92 per kilo from P57.10.
John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the BSP’s forecast is based on the historical trend of rice prices, which reflected elevated wholesale prices during the first half.
“While DA and PSA (Philippine Statistics Authority) data show rice prices declined slightly in late October, BSP likely referred to the overall price elevation that persisted for most of the month, especially (in the first half), when retail and wholesale rice prices were still high due to tight domestic supply, import delays, and higher logistics costs,” he said in a Viber message.
“Thus, rice remained an upward pressure on inflation relative to its historical trend, even if it softened toward month end,” he added.
Electricity rates also jumped during the month as the Manila Electric Co. hiked the overall rate by P0.2331 per kilowatt-hour (kWh) to P13.3182 per kWh in October.
The BSP said lower prices of oil, meat and fruits could partially temper inflationary pressures during the month.
In October, pump price adjustments stood at a net increase of P1.80 a liter for gasoline, P2.10 per liter for diesel and P1.10 per liter for kerosene.
“As for fuels, the BSP may have noted lower pump prices toward the end of October, which began to offset earlier price hikes in the month,” Mr. Rivera said.
Mr. Rivera noted that pump prices rose in mid-October but later dropped amid weaker demand expectations and stable output from the Organization of the Petroleum Exporting Countries.
“Hence, while fuel prices increased on a monthly net basis, the downward correction late in the month helped temper inflation momentum going into November,” Mr. Rivera added.
Earlier this month, the central bank said its inflation expectations remain “well-anchored.”
In the nine months to September, headline inflation averaged 1.7%, matching the BSP’s target for the year.
For 2026, the central bank sees inflation accelerating to 3.1%, before slowing to 2.8% in 2027.
The PSA is set to release the October inflation data on Nov. 5.
“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.
On Oct. 9, the Monetary Board continued its easing cycle, cutting its policy rate by 25 basis points (bps) to a three-year low of 4.75%.
It has so far reduced borrowing costs by 175 bps since it began its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. has left the door open for further easing until next year as they seek to support the economy as corruption scandals clouded the growth outlook.
BSP Monetary Board member Benjamin E. Diokno likewise said on Monday that he expects another 25-bp cut to the policy rate before yearend and potentially more in 2026.
The Monetary Board will hold its last policy-setting meeting this year on Dec. 11.
