By Katherine K. Chan, Reporter

The Bangko Sentral ng Pilipinas (BSP) said inflation will most likely remain above its target for a sixth consecutive month in August, as unfavorable weather pushed up food prices and fuel costs stayed elevated.

In its month-ahead forecast released on Friday, the central bank said it expects headline inflation to settle between 5.5% and 6.5% in August. The projected range sits well above the BSP's 2%–4% target band for 2026, which the actual print has now breached for six straight months — a streak that shapes the central bank's policy considerations, as its mandate requires it to keep inflation within that target range.

At the upper end of the forecast, inflation may have picked up from 6.2% in July and the 1.5% clip in August last year. That would also bring the headline print to its fastest in three months, or since the 6.8% reading in May. At the bottom end, inflation would be the slowest print in five months, or since the 4.1% clip in March.

The Philippine Statistics Authority (PSA) will release the August inflation report on Sept. 4.

"Upward price pressures for the month are likely to be driven by higher rice, vegetable, fruit, and fish prices, partly due to unfavorable weather conditions, and elevated domestic fuel costs," the central bank said.

According to PSA data, the per-kilogram price of regular milled rice jumped by 22.95% year on year to P49.61 in the latter half of August from P40.35. It was also 0.63% costlier than the P49.3 recorded in the same period in July.

The price of well-milled rice stood at P56.29 a kilo, rising by 19.59% from P47.07 a kilo last year and by 1.08% from P55.69 a kilo the prior month. Rice is a Philippine diet staple, so movements in its price carry outsized weight in household budgets and in the inflation basket.

Meanwhile, gasoline prices were trimmed by as much as P2.20 per liter this month, while diesel prices climbed by up to P0.61 per liter, based on data from the Department of Energy. Kerosene prices were down by as much as P0.99 per liter.

However, retail fuel prices remained above the P50-to-P60 per liter range seen before the Middle East war began in late February. At end-August, gasoline cost between P64.20 and P96.57 per liter, diesel at P77 to P100.84 per liter, and kerosene at P99.10 to P133.32 per liter.

Still, the central bank said headline inflation in August likely gained some relief from lower costs of meat and electricity, as well as the peso's appreciation against the dollar. A weaker peso typically adds to inflation by making imported goods, including fuel, more expensive in local-currency terms.

In August, the Manila Electric Co. cut electricity rates by 4.28 centavos per kilowatt-hour (kWh) to P14.7833 from P14.8261 per kWh. This translated to a P9 deduction in the total electricity bill of households consuming 200 kWh monthly.

The peso touched the P60-a-dollar level several times this month after weeks of trading above the P61 handle. However, Bankers Association of the Philippines data showed the local unit tumbled by 23.8 centavos to a new all-time low finish of P61.888 against the greenback on Thursday, breaking its previous record of P61.847 on July 24. It has weakened by P3.098, or 5.01%, from its P58.79 close on December 29, 2025. It also touched the P62 level for the first time, weakening to as much as P62.25 during the early Friday session.

"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 latest developments in the Middle East and recent weather disturbances on the country's inflation and economic outlook."

The BSP now sees inflation settling at 6.1% by yearend, slower than its previous 6.4% estimate but sharply faster than the 1.7% print in 2025. Beyond the PSA's Sept. 4 release, upcoming data on fuel price adjustments, rice prices, and the peso's trajectory will inform whether price pressures ease toward the target band.