BSP sees October inflation at 7.1%-8.1%

The Bangko Sentral ng Pilipinas (BSP) expects Philippine headline inflation in October 2026 to settle between 7.1% and 8.1%. This forecast means inflation may either ease slightly from or accelerate beyond the 7.2% print recorded in September. If October inflation reaches the upper end of the range, it would be the fastest pace in nearly four years and significantly higher than the 1.7% rate posted in October a year earlier.

Either at the bottom or top of the forecast range, inflation would remain above the BSP’s 3% target and mark the eighth consecutive month of target overshoot. The projection highlights the persistence of price pressures despite some relief from selected components of the consumer basket.

The BSP identifies higher prices of domestic fuel, electricity and transport fares as the main sources of upward pressure on October inflation. Elevated energy costs linked to developments in the Middle East continue to push domestic prices higher. Local fuel retailers implemented mixed adjustments during the month, with gasoline and diesel prices declining while kerosene prices rose by as much as P4.57 per liter.

Transport costs are also adding to inflation after the Land Transportation Franchising and Regulatory Board approved fare increases for all public utility vehicles effective September 28. These moves are feeding through to the headline inflation reading, reinforcing the impact of energy price dynamics on household expenses.

Despite strong price pressures from energy and transport, the BSP notes that lower prices for key agricultural commodities are likely providing some offset. Prices of rice, vegetables, meat and fish have declined due to favorable supply conditions, easing part of the burden on consumers. Rice prices, while still above their levels a year earlier, eased on a month-on-month basis in the first half of October.

These softer food prices are expected to temper the headline inflation print, preventing an even sharper acceleration. The balance between rising energy and transport costs and moderating food prices underpins the BSP’s relatively wide forecast range for October.

The elevated September inflation rate played a key role in the BSP’s decision to adopt a more aggressive anti-inflation stance, including a 50-basis-point rate increase enacted recently. BSP officials have indicated that inflation is expected to accelerate further in the coming months due to oil prices, transport fares and potential weather-related effects on food prices. They have kept the option of further rate hikes open, with the size of any future moves dependent on incoming data.

For 2026, the BSP projects inflation to average 6.1%, well above its 3% target. The central bank has emphasized that it will remain vigilant and guided by the latest information on inflation and growth prospects. It also plans to continue assessing the impact of recent developments in the Middle East on the Philippines’ inflation path and overall economic outlook.