By Katherine K. Chan, Reporter
HIGHER FUEL, electricity, and food prices, along with the peso’s sustained weakness, may have driven inflation to a new peak this year in October, analysts said.
Headline inflation likely accelerated to 7.6% in October, from 1.7% a year ago, according to a median estimate in a BusinessWorld poll of 22 analysts and economists.
If realized, inflation would top this year’s peak of 7.2% recorded in April and September.
This would likewise mark the fastest headline inflation in nearly four years or since the 8.6% in February 2023 and match the March 2023 reading.
It would also bring the 10-month average headline inflation to 5.6%.
October would also be the eighth month in a row that the headline inflation breached the central bank’s 3% target and 4% ceiling.
Still, the median estimate likewise falls within the Bangko Sentral ng Pilipinas’ (BSP) 7.1%-8.1% forecast for the month.
The Philippine Statistics Authority (PSA) will release the October inflation data on Thursday (Nov. 5).
“October’s inflation uptick was mostly sparked by a surge in everyday utility and travel costs, thanks to higher gas prices, pricier electric bills, and increased commute fares,” Alain Jomarie G. Santos, chairman of the Department of Economics at the University of Santo Tomas, said via Facebook Messenger.
“Unstable global oil markets intensified by conflict in the Middle East pushed up fuel expenses, which quickly filtered down into monthly utility statements and daily transit rates,” he added.
Oil price adjustments were mixed in October. The price of gasoline fell by up to P1.11 a liter and diesel by P0.52 a liter, while kerosene rose by as much as P4.57 a liter. At end-October, the per liter price of gasoline ranged between P75.10-P101.10, diesel between P88-P102.5, and kerosene between P116-P145.34 in Metro Manila and nearby areas.
Amid persistently high fuel prices, the Land Transportation Franchising and Regulatory Board approved fare hikes for all public utility vehicles effective Sept. 28.
Electricity rates also climbed last month with the Manila Electric Co. imposing a 31.91 centavos per kilowatt-hour (kWh) increase to P15.0615 from P14.7424 per kWh in September. This meant households consuming 200 kWh monthly paid P64 more in their total electricity bill.
FOOD, PESO PRESSURES
Meanwhile, several analysts said elevated food prices likely weighed on October inflation, although some noted that easing prices in some food items may have provided some relief.
“Food prices remained a major source of inflationary pressure. The latest PSA data show that food and non-alcoholic beverage inflation accelerated from 4.6% in August to 6.7% in September,” Marites M. Tiongco, a professor at the De La Salle University Carlos L. Tiu School of Economics, said in a Viber message.
“Rice, fish, and vegetables were particularly important contributors. Weather-related supply disruptions and concerns about El Niño affecting agricultural production created additional upside risks for October,” she added.
S&P Global Market Intelligence Principal Economist Harumi Taguchi likewise sees the higher costs of fruit and rice stoking inflation, especially considering the base effects from lower rice prices last year.
However, China Banking Corp. Chief Economist Domini S. Velasquez noted that prices of most major food items eased last month.
“In contrast, food inflation eased month on month, with lower prices for rice, vegetables, meat, fish, eggs, and sugar offsetting higher fruit prices,” she said in an e-mail.
Based on PSA data, the average cost of local regular milled rice rose by 23.86% year on year to P49.79 a kilo from P40.20, but slipped by 0.42% from P50 a month ago.
The price of well-milled rice also went up by 18.86% to P56.22 a kilo from P47.30 a kilo the prior year, but dipped by 0.46% from P56.48 a kilo in the first half of September.
Still, price increases in certain food items alongside higher fuel costs likely rippled through the overall consumer price basket, according to Oxford Economics Assistant Economist Jun Hao Ng.
“Retail agricultural prices point to increases across several food categories, while domestic fuel prices edged up during the month. These pressures are also likely to have spilled over into the broader inflation basket, pushing core inflation higher,” he said in an e-mail.
The peso’s continued depreciation in October may have also worsened the country’s import-driven inflation, according to analysts.
“Imported cost pressures added to the upside,” Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said in a commentary. “The wider depreciation of the peso raised the cost of fuel, food imports, and USD (US dollar)-denominated power supply contracts.”
The Philippines’ position as a net food importer exposes it even more to foreign exchange (FX)-tied inflation, ANZ Research FX analyst and economist Kausani Basak noted.
“The weaker PHP (Philippine peso) has added another layer of risk to the food inflation outlook as the Philippines is a net food importer,” she said in a report.
From the P58- to P59-a-dollar level prewar, the local unit breached the P64 handle last month after breaking multiple all-time lows. It hit a historic trough of P64.17 against the greenback on Oct. 27, which marked the seventh straight trading day that it finished at a record low.
Year to date, the peso has fallen by P4.950 or 7.77% from its P58.79 finish on Dec. 29, 2025.
On the other hand, University of Asia and the Pacific Economist Marco Antonio C. Agonia noted that lagged impact of the minimum wage hike in the National Capital Region (NCR) “may also be felt more strongly at this point.”
On Sept. 26, the minimum wage in NCR was raised by P60, bringing nonagricultural workers’ daily pay to P755 and those for agricultural workers and employees of retail, service, and small manufacturing establishments to P718.
MORE HIKES?
For several economists, the central bank may have to extend its tightening cycle further to contain broadening inflation risks.
Moody’s Analytics Head of Southeast Asia Economics Denise Cheok said a fifth straight rate hike is likely underway as inflation is expected to remain elevated until the year-end.
“We expect elevated oil prices and adverse weather conditions to keep inflation high into the end of the year. We expect to see BSP raise rates in its December meeting,” she said in an e-mail.
On Oct. 22, the Monetary Board lifted its benchmark rates for a fourth straight meeting amid persistent oil-driven price pressures and intensifying risks from a strong El Niño.
It raised its key policy rate by a larger-than-usual 50 basis points (bps) to a nearly two-year high of 5.5%, bringing its cumulative hikes to 125 bps since it first tightened in April.
Oxford Economics’ Mr. Ng likewise expects the BSP to raise its interest rates further, with continued price volatility potentially giving it room to be more aggressive.
“We expect inflation to rise further, supporting the BSP’s hawkish stance at its October meeting and our view that further rate hikes are likely,” he said.
“Price volatility associated with El Niño and the conflict in the Middle East could intensify food and energy price pressures, posing material upside risks to our forecast. These risks could prompt the BSP to pursue a more aggressive or prolonged monetary tightening cycle,” he added.
Meanwhile, BPI’s Mr. Neri noted that the peso’s rapid depreciation “adds urgency” in delivering the additional necessary rate hikes.
“Further rate hikes may be necessary to support the local currency, contain second-round effects, and anchor inflation expectations before price pressures become more deeply embedded,” he added.
BSP Governor Eli M. Remolona, Jr. has left the door open for further tightening amid intensifying inflation risks but said he hopes they wouldn’t need to deliver more outsized hikes.
The Monetary Board will hold its last policy review this year on Dec. 17.