The Bangko Sentral ng Pilipinas expects inflation to remain elevated in 2027, with the government adopting a 4 percent to 5 percent inflation assumption in crafting the proposed national budget amid continued global and domestic price risks.
BSP Governor Eli Remolona said during the House of Representatives budget deliberations on the Development Budget Coordination Committee that the central bank remains ready to respond if inflation pressures persist.
“Over the medium term, we expect inflation to ease gradually. However, risks remain tilted to the upside,” Remolona said.
He added that the Philippine banking system remains well-capitalized and liquid, while the country’s strong external buffers provide support against global economic uncertainties.
BSP Deputy Governor Zeno Ronald Abenoja said the inflation assumption for the 2027 budget reflects expectations that price growth will remain above the central bank’s 3 percent target before easing further in 2028.
“For the national government budget purposes, we assume that headline inflation to be around 4 to 5 percent for 2027,” Abenoja said.
The BSP currently forecasts inflation to average 6.4 percent in 2026 and 4.5 percent in 2027, before slowing to about 3.1 percent in 2028.
Abenoja said risks remain tilted upward, particularly from potential increases in global oil prices and shifts in inflation expectations. Markets currently see Dubai crude averaging between USD70 and USD90 per barrel in 2027, although geopolitical tensions, particularly in the Middle East, could push prices higher.
The inflation outlook will be a key factor in shaping government spending plans, monetary policy decisions, and business expectations in the coming year. A higher-than-target inflation environment could affect household purchasing power, borrowing costs, and investment decisions.
For the 2027 budget framework, the government expects the peso-dollar exchange rate to remain broadly stable, while the domestic one-year interest rate is projected at 5 percent to 6 percent in both 2026 and 2027.
The BSP’s outlook highlights the delicate balance policymakers face: supporting economic growth while ensuring that inflation does not become entrenched. With global commodity markets and geopolitical risks remaining uncertain, maintaining price stability will remain central to the country’s economic strategy.
