Philippines Inflation yo

Inflation remains above target in August

Latest reading: Consumer prices increased 6.1% on a year-on-year basis in August, following a 6.2% rise in the previous month. The latest reading remained sharply above the 2.0–4.0% target range of Bangko Sentral Pilipinas (BSP). Relative to the previous month's figures, there were reduced price pressures for food and non-alcoholic beverages (+4.6% in annual terms vs +5.2% in July) and housing and utilities (+7.9% vs +8.2% in July). In contrast, there were higher price pressures for clothing and footwear (+3.1% vs +3.0% in July) and transport (+13.5% vs +11.9% in July). Finally, consumer prices rose 0.59% in August on a seasonally adjusted month-on-month basis, following a 0.07% increase in the prior month.

Panelist insight: ING’s Deepali Bhargava said: “El Niño conditions are now firmly established. The World Meteorological Organisation expects weather disruptions to strengthen and persist until at least February 2027. The risk of renewed food-price pressure is rising, especially for rice and other weather-sensitive crops. This could slow the disinflation process. […] Moreover, core inflation remains sticky above 4% YoY, while renewed upward pressure from oil prices could keep headline inflation elevated. We expect CPI inflation to remain above 5.5% YoY for the remainder of 2026. The risk of further wage pass-through into services inflation remains. As a result, inflation is unlikely to return sustainably to the Bangko Sentral ng Pilipinas’ target range before 2028.” Nomura’s Euben Paracuelles and Nabila Amani commented on the outlook for underlying price pressures and monetary policy: “A further monetary tightening remains warranted based on our forecast for headline inflation to stay above BSP’s 2-4% target range in coming months. Importantly, we maintain our view that core inflation will remain on an upward trajectory throughout the rest of the year, which BSP would likely assess as a sign of second-round effects, requiring additional policy response.”

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