Philippine inflation surged to 7.2 percent in September, matching the pace in April, which is the fastest rate in three-and-a-half years and putting the Bangko Sentral ng Pilipinas under renewed pressure to tighten monetary policy.
This is the second time this year that it accelerated to 7.2 percent, which is the fastest clip since the 7.6 percent recorded in March 2023. It also jumped from 6.1 percent in August and 1.7 percent a year earlier.
The acceleration was at the top end of BSP’s forecast range of 6.4 percent to 7.4 percent for the month, raising the prospects of a further increase in interest rates when the central bank meets later this month.
Food prices were again the biggest troublemaker. Food and non-alcoholic beverages inflation accelerated to 6.7 percent from 4.6 percent in August, accounting for 35.8 percent of the overall inflation rate.
Food inflation itself climbed to 6.8 percent from 4.6 percent, as prices of vegetables, tubers, plantains, cooking bananas and pulses swung to a 10.7 percent annual increase from a 3.4 percent decline in August.
Rice remained a major pressure point, with inflation accelerating to 20.3 percent from 19.4 percent. Fish and seafood prices rose 7.4 percent, while fruit and nut inflation jumped to 8.7 percent.
Beyond food, housing, water, electricity, gas and other fuels inflation rose to 8.4 percent from 7.9 percent, while transport inflation accelerated to 14.6 percent from 13.5 percent.
The squeeze was harsher for poorer households. Inflation for the bottom 30 percent income group hit 9.0 percent, up from 8.2 percent in August, again driven largely by food, particularly rice.
More worrying for the BSP, core inflation also accelerated to 4.7 percent from 4.1 percent, suggesting price pressures are spreading beyond food and energy. Core inflation is highest since October 2023, when it was at 5.3 percent.
With average inflation at 5.4 percent for January to September, the latest surge leaves the central bank with a tougher policy puzzle. Rate cuts may have to wait, while the possibility of tighter monetary settings moves back into the conversation.
