By Katherine K. Chan, Reporter
PHILIPPINE INFLATION could hit a fresh high for the year in November as persistent and emerging price pressures threaten to drive up consumer prices, economists said.
“S&P Global Market Intelligence expects headline inflation could peak in November 2026, but depending largely on developments in the Middle East and the effects of El Niño,” S&P Global Market Intelligence Principal Economist Harumi Taguchi told BusinessWorld in an e-mail.
A strong to very strong El Niño is active in the Tropical Pacific, according to the state weather bureau. The El Niño event is expected to peak before the year ends and last until the first quarter of 2027.
El Niño typically brings severe dry conditions to parts of the country, which could strain the agriculture sector and the overall economy as it threatens water supply and energy production.
University of Santo Tomas Department of Economics Chair Alain Jomarie G. Santos said inflation could range between 7.3% and 8.2% in November before easing in December.
“Aside from the month of October, prices are expected to stay high for a bit longer which will likely keep the inflation rate in November probably between 7.3 and 8.2%, as families and businesses adjust to recent spikes in fuel and electricity bills,” he told BusinessWorld via Facebook Messenger.
“Once those higher energy costs settle down, price increases should start to level off in December,” Mr. Santos added.
Inflation hit this year’s peak of 7.2% in September amid renewed surges in oil, food, and utility costs, marking the seventh consecutive month that inflation was above the central bank’s 3% target.
Headline inflation is expected to accelerate to a new peak of 7.6% in October based on the median estimate in a BusinessWorld poll of 22 analysts.
If realized, this would be the fastest inflation in nearly four years or since 8.6% in February 2023. It would likewise match the March 2023 reading.
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. on Tuesday said it might take a few more months before inflation will hit its peak.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said inflation could peak in the fourth quarter to end at a full-year average of 5.9%.
“We expect inflation to peak sometime in the fourth quarter, although the exact timing remains uncertain given developments in the peso, commodity prices and domestic food supply. For full-year 2026, we expect inflation to average 5.9%,” he said in an e-mail.
The central bank, on the other hand, expects inflation to settle at 6.1% this year, 6% next year before easing to 3.3% in 2028.
HOLIDAY SPENDING
Meanwhile, several economists see the holiday adding pressure to inflation towards the end of the year.
“Expecting inflation to remain above 7% for the last two months of the year — with its potential peak in November — given upside price pressures from El Niño and holiday spending,” Security Bank Corp. Chief Economist Angelo B. Taningco said in an e-mail.
On the other hand, University of Asia and the Pacific Economist Marco Antonio C. Agonia said inflation could accelerate above 8% by December driven by holiday spending and still elevated oil prices.
“Headline inflation may pick up towards December, when headline inflation may top 8%, especially if holiday spending ends up stronger than expected and oil prices do not wind down,” he told BusinessWorld in an e-mail.
However, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco projects inflation to peak at 7.3% in October, but flagged lingering risks from oil and food inflation.
“October could mark the peak in inflation, but a return to the BSP’s target range is unlikely until April next year,” Mr. Chanco told BusinessWorld in an e-mail.
“The risks are obviously still skewed to the upside, given the continued rise in global oil prices and the potential for El Niño weather risks to affect the world, let alone domestic, food inflation,” he added.
Mr. Remolona earlier said that the BSP remains on a tightening path as they see inflation remaining elevated or above their target over the next two years.
He signaled that easing is not yet on the Monetary Board’s table as the transmission of monetary policy adjustments to the inflation rate takes time.
Since it began tightening in April, the central bank has so far delivered a total of 125 basis points (bps) in hikes.
It raised its key policy rate by a larger-than-expected 50 bps at its Oct. 22 meeting in a bid to contain intensifying price pressures and chase the curve. This brought benchmark borrowing costs to 5.5%, the highest in nearly two years or since 5.75% in February 2025.
The Monetary Board will hold its last rate-setting meeting this year on Dec. 17.