August inflation seen at faster 1.2%
Consumer prices may have climbed at a quicker clip in August, pushed up by higher electricity and transport costs and a spike in vegetable prices after monsoon rains battered crops.
Inflation, as measured by the consumer price index (CPI), likely sped up to 1.2 percent, according to the median estimate of 15 economists polled by the Inquirer last week.
This suggests that the official figure, due Sept. 5 from the Philippine Statistics Authority, would be up from July’s 0.9-percent increase and in line with the Bangko Sentral ng Pilipinas’ (BSP) forecast of 1 to 1.8 percent.
Even with the pickup, inflation is still expected to undershoot the BSP’s 2 to 4 percent target range for a sixth straight month—a stretch of subdued price gains that could shape the central bank’s next policy moves.
“Accelerating food prices due to disruptive weather and higher energy costs will be the likely culprits for the increase,” economists at Metrobank said, penciling in a 1.3 percent CPI for August.
Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said a weak currency that flirted with the 56 and 57 levels last month may have added import costs.
Easing rice prices
But Asuncion said easing rice prices, a staple for Filipino households, and an influx of cheaper Chinese goods seeking to avoid US tariffs may have tempered price pressures. His forecast of 1.2 percent matched the consensus.
Sarah Tan, an economist at Moody’s Analytics, pointed to “several risks,” including weather disturbances that could hit crop output and reverse recent declines in food inflation.
“Meanwhile, global oil prices pose a threat if geopolitical tensions escalate,” she said. Tan expects inflation to come in at 1.1 percent.
The August CPI would be reported a week after the BSP slashed the overnight borrowing rate by a quarter point to 5 percent. It was a level that Governor Eli Remolona Jr. described as the “Goldilocks,” neither inflationary nor restrictive to economic growth.
Analysts say the BSP’s easing cycle is nearing its end. Still, Remolona left the door open to further easing, saying the Monetary Board could consider another reduction at its October or December meetings if demand shows signs of weakening.
Economists at ANZ Research, who projected last month’s inflation at 1 percent, believe that the BSP will still have room to cut rates further.
“We forecast a 25-basis-point rate cut to 4.75 percent in the fourth quarter of 2025,” they wrote.
