By Katherine K. Chan, Reporter
SOFTER FOOD and utility prices eased pressures from elevated transport costs in August, bringing headline inflation to its slowest pace in five months, the Philippine Statistics Authority (PSA) said on Friday.
Based on PSA data, headline inflation, as measured by the consumer price index, eased to 6.1% in August from 6.2% in July, but accelerated from 1.5% a year ago.
This was the slowest headline clip in five months or since the 4.1% in March.
This also fell within the central bank’s 5.5%-6.5% forecast for the month, but was slightly faster than the 6% median estimate of 20 analysts polled by BusinessWorld.
However, August marked the sixth straight month that the headline print settled above the Bangko Sentral ng Pilipinas’ (BSP) 3% target.
In the eight months to August, inflation averaged 5.2%.
The cooler headline print was largely due to slower inflation in food and electricity, according to National Statistician Claire Dennis S. Mapa.
“Lower food inflation and slower increases in housing, water, electricity, gas, and other fuels helped ease overall price pressures during the month,” the Department of Economy, Planning, and Development (DEPDev) also said in a separate statement.
Food inflation eased to 4.6% in August from 5.2% in July as the decline in vegetables and seafood prices offset the uptick in rice inflation, Mr. Mapa said. This was the slowest food inflation since 2.9% in March.
Inflation for vegetables decelerated to -3.4% in August from 8.4% in the previous month, and eased to 6.6% from 7.8% for fish and other seafood.
“Overall food inflation went down amid a more stable domestic supply, driven by the decline in vegetable prices and the slowdown in inflation for fish,” the central bank said in a separate statement. “By contrast, rice inflation accelerated, partly due to higher logistics costs.”
Rice prices accelerated significantly in August, bringing rice inflation to an over two-year high of 19.4% from 17.1% in July. This was the fastest rice inflation since 20.9% in July 2024.
In the second half of August, regular milled rice was sold for an average of P49.61 per kilo, rising by 22.95% year on year from P40.35 and by 0.63% from P49.3 per kilo a month ago.
Meanwhile, the per-kilo price of well-milled rice also climbed to P56.29 during the period, up by 19.59% from P47.07 last year and by 1.08% month on month from P55.69.
“While the overall figure remained stable, the moderation in key drivers such as food inflation gives us confidence that we are moving in the right direction,” DEPDev Secretary Arsenio M. Balisacan said.
UTILITIES, TRANSPORT
PSA data also showed inflation for housing, water, electricity, gas and other fuels eased to 7.9% in August from 8.2% a month earlier, driven by electricity inflation slowing to 14.4% from July’s revised 16.9%.
Last month, the Manila Electric Co. cut electricity rates by 4.28 centavos per kilowatt-hour (kWh) to P14.7833 from P14.8261 per kWh. This meant households consuming 200 kWh monthly paid P9 less in their total electricity bill.
Mr. Mapa likewise noted that the softer food inflation tempered the impact of higher transport prices on headline inflation.
“So, the (inflation for the) items that declined, for example, as I mentioned earlier, in the food basket, there were components that went down, such as meat and vegetables. These declines somewhat compensated for the upward movement in transport costs,” he told a press briefing in mixed English and Filipino.
Transport inflation picked up to 13.5% in August from 11.9% in July.
Retail fuel prices last month remained above the pre-war range of P50 to P60 per liter. At end-August, gasoline cost between P64.20 and P96.57 per liter, diesel at P77 to P100.84 per liter, and kerosene at P99.10 to P133.32 per liter.
This came even as gasoline prices were trimmed by as much as P2.20 per liter in August, while kerosene prices were cut by up to P0.99 per liter, based on Department of Energy data. The cost of diesel, on the other hand, increased by as much as P0.61 per liter.
Meanwhile, core inflation, which excludes volatile food and oil prices, also cooled for a second straight month to 4.1% from 4.2% in July. However, this was still faster than the 2.7% in August 2025.
Inflation in the National Capital Region (NCR) also slowed to 4.1% last month from 4.4% in July but quickened from 2.9% last year.
Outside NCR, inflation eased to 6.6%, from July’s 6.7% but accelerated from the 1.1% a year earlier.
However, inflation for the bottom 30% of income households in August steadied at July’s pace of 8.2%, but accelerated from -0.6% last year. As of August, it stood at an average of 6.2%.
BAD WEATHER TO DRIVE PRICES HIGHER
While food prices have eased for now, consumers may expect some increases this month as the bad weather disrupted local agricultural production, Mr. Mapa noted.
“Although vegetable prices in August posted negative inflation due to declines in some items, other components still rose. So, we expect some change in movement for the month of September,” the national statistician said.
According to the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), two to three tropical cyclones may enter or form in the Philippine Area of Responsibility this month.
The BSP also earlier said inflation will likely peak in the fourth quarter of this year as the impact of the “super El Niño” feeds into food prices.
PAGASA said the country may encounter a “strong” El Niño season from September to November, which could intensify into a “very strong” one between October and January next year.
Weather disruptions due to the severe El Niño could fracture local production, particularly rice, although government intervention could also influence price movements, PSA’s Mr. Mapa noted.
Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa said the inflation figures for August justified the BSP’s decision to remain measured in adjusting its monetary policy.
“BSP remains vindicated for carrying out measured tightening to balance out fulfilling the price stability mandate while still providing much needed support to a challenging growth environment,” he said in a Viber message.
For Chinabank Research, the BSP’s cumulative hikes since April may suffice to tackle emerging inflationary pressures, leaving limited room for further tightening.
“Despite the expected pickup, we see limited scope for another rate hike, as the BSP’s pre-emptive 25-bp (basis point) hike in August, bringing the total increase in this hiking cycle to 75 bps, should help address emerging upside risks and keep inflation expectations anchored,” it said in a note.
The BSP also said on Friday that they will keep a close watch of the developments surrounding the Middle East war and weather disturbances.
“Going forward, the BSP will remain guided by incoming data and its assessment of risks to the inflation outlook,” it added.
At its August meeting, the Monetary Board tightened for a third time in a row as it sought to preemptively contain inflation risks from the looming severe El Niño, potential wage hike, and volatile global oil prices.
It raised its benchmark interest rate by 25 bps to an over one-year high of 5%, bringing its total hikes to 75 bps since it began tightening in April.
BSP Governor Eli M. Remolona, Jr. said they hope they won’t have to hike more, but left the door open to tighten further as needed to bring inflation closer to their 3% target.
The BSP expects inflation to tread above their target over the next three years, with 6.1% in 2026, 5.4% in 2027, and 3.3% in 2028.
Meanwhile, Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, sees scope for one more rate hike before yearend, citing the negative real policy rate and looming inflation risks.
“Even with the benchmark rate at 5.0%, the real policy rate remains negative because headline inflation (6.1%) sits significantly higher,” he said in a Facebook post. “Economists note that negative real interest rates can inadvertently sustain high demand and discourage savings when the economy actually needs cooling.”
The weakening peso may also prompt the central bank to tighten later this year to control imports-tied inflationary pressures, Mr. Peña-Reyes noted.
“When local interest rates do not offer high enough yields relative to global markets, capital outflows increase,” he said. “The BSP may feel forced to deploy another preemptive hike to stabilize the currency and prevent imported inflation from climbing.”
According to Chinabank Research, every P1 depreciation of the peso versus the dollar contributes about 0.03 percentage point to inflation, which is channeled through imported goods.
The peso breached the P62-a-dollar handle for the first time last month. It stood at an average of P61.3281 versus the greenback in August, about 7.1% or P4.0756 weaker than P57.2525 a year ago
On Wednesday, the currency tumbled by 16.5 centavos to close at an all-time low of P62.565 against the greenback, breaking its previous historic P62.4 trough on Tuesday, according to Bankers Association of the Philippines data.