By Katherine K. Chan | BusinessWorld

Philippine headline inflation may have accelerated past 8% in October, as higher costs of domestic fuel, electricity and transport fares weighed on the consumer price print, the Bangko Sentral ng Pilipinas (BSP) said.

In its forecast released on Friday, the central bank said it expects headline inflation to settle between 7.1% and 8.1% for the month. That would take the reading above the 7.2% peak recorded in both September and April, and could make it the fastest print in nearly four years — since the 8.6% posted in February 2023.

At the upper end of the forecast, inflation would sharply quicken from the 1.7% clip recorded in October last year. At the lower end, it would ease from September to mark the slowest print since August's 6.1%. Under either outcome, however, inflation would stay above the BSP's 3% target for the eighth consecutive month.

The Philippine Statistics Authority (PSA) is scheduled to release the official October inflation report on Nov. 5 — the figure that will show where within the central bank's projected band the actual reading lands.

"Upward price pressures are likely to come from higher prices of domestic fuel, electricity, and transport fares," the BSP said in a statement.

Fuel, Power and Transport Costs

Local fuel retailers implemented mixed price adjustments this month, with gasoline declining by as much as P1.11 per liter and diesel by P0.52 per liter, while kerosene climbed by up to P4.57 per liter.

At end-October, gasoline retailed at P75.10 to P101.10 per liter, diesel at P88 to P102.5 per liter, and kerosene at P116 to P145.34 per liter in Metro Manila and nearby areas — levels well above the prewar range of P50 to P60 per liter.

Meanwhile, Manila Electric Co. raised electricity rates by 31.91 centavos per kilowatt-hour (kWh) to P15.0615 from P14.7424 per kWh in September. The utility's first rate increase in two months translates into a P64 addition to the total monthly bill of households consuming 200 kWh.

The Land Transportation Franchising and Regulatory Board likewise approved fare increases for all public utility vehicles, effective Sept. 28. Electricity and transport fares sit inside the consumer price basket, so adjustments by the utility and the transport regulator feed directly into the headline reading the central bank is forecasting.

Food Prices Provide Partial Offset

Lower food prices amid "favorable supply conditions" likely offered some relief to the October headline print, according to the BSP.

"These pressures could be partially offset by lower prices of key agricultural commodities, such as rice, vegetables, meat, and fish, owing to favorable supply conditions," the central bank said.

Rice prices remained above year-ago levels but eased month on month in the first half of October. Based on PSA data, the average cost of local regular milled rice rose 23.86% year on year to P49.79 per kilo from P40.20, while slipping 0.42% from P50 a month earlier. The price of well-milled rice climbed 18.86% to P56.22 per kilo from P47.30 a year earlier, but fell 0.46% from P56.48 per kilo in the first half of September. Rice, a staple of the Filipino diet and one of the largest single items in the consumer price basket, remains a key swing factor in the country's inflation readings.

Outlook

"The BSP will remain vigilant and guided by incoming data, particularly on inflation and growth prospects," the central bank said. "It will continue to assess the impact of the latest developments in the Middle East on the country's inflation and economic outlook."

The BSP sees inflation averaging 6.1% by year-end, sharply faster than the 1.7% print in 2025.

Source: BusinessWorld (bworldonline.com), by Katherine K. Chan — BSP: Inflation likely between 7.1-8.1% in October