Headline inflation likely rose to 1.9 percent in September, driven by higher fish and rice prices, following rains and the government’s rice import suspension. These were partially offset by lower electricity bills, cheaper vegetables, and softer oil prices. Despite the uptick, inflation remains well below the Bangko Sentral ng Pilipinas’ (BSP) 2 to 4 percent target range, leaving room for monetary policy easing.
The mild inflation provides relief for households coping with cost-of-living pressures, though food price volatility—particularly rice—remains a concern. For businesses, especially those reliant on imports or energy, the environment remains relatively stable, with lower fuel and power prices easing input costs.
Looking ahead, inflation is expected to stay around 2 percent through December, but could breach 3 percent in early 2026 due to base effects and potential global supply chain disruptions, including those tied to U.S. trade policies.
Despite this, analysts say the BSP still has room to cut rates, possibly as soon as next week, though a December move is more likely, depending on Q3 GDP data. BSP Governor Eli Remolona has signaled openness to easing if economic weakness persists but maintains that current policy rates are still in a “Goldilocks zone”.
Further cuts may be limited, but could materialize if the economy underperforms. Future BSP moves may also depend on Federal Reserve policy shifts, especially if rate cuts accelerate post-2026. However, aggressive easing carries risks, including potential inflation resurgence and delayed reserve requirement ratio (RRR) cuts, which could impact liquidity and lending across sectors.
While short-term inflation remains manageable, external risks and food supply volatility bear close monitoring. Businesses should prepare for modest monetary easing, while households may benefit from relatively stable prices, barring further food supply shocks.
