PH inflation seen staying above 6% in 2026
Inflation is likely to remain above government targets through the rest of 2026, with the Congressional Policy and Budget Research Department (CPBRD) seeing growth in consumer prices potentially breaching 7 percent anew in the second half.
In its latest budget brief and discussion paper, the CPBRD said full-year inflation may settle between 5.5 percent and 6.1 percent. This is well above the central bank’s 3-percent target, with the upper end exceeding the government’s recently revised 6 percent to 7 percent forecast.
For the third quarter, the state-run think tank projected inflation at 6.37 percent to 7.32 percent, suggesting a possible acceleration from the 6.2 percent recorded in July.
The July figure marked the third straight month of easing after inflation peaked at 7.2 percent in April.
Inflation in the fourth quarter is seen ranging from 5.91 percent to 7.31 percent.
“To wit, even with volatility, it is highly unlikely that inflation will fall below 6% in 2026. Risks to the upside include weaker-than-expected harvests in Q3 and Q4 [particularly due to the monsoon, a super El Niño, and fertilizer constraints] and continued commodity supply constraints arising from the Iran war,” CPBRD said, noting that only one of its 16 forecast runs yielded a rate below 6 percent.
At either end of CPBRD’s forecast ranges, Philippine inflation would still be the highest among its Association of Southeast Asian Nations (Asean) peers, based on recent forecasts from multilateral institutions.
Recent projections put the country’s inflation at 6.8 percent for 2026 under the Organization for Economic Cooperation and Development, 5.9 percent under the Asian Development Bank, 4.3 percent under the International Monetary Fund and 6 percent under the Asean+3 Macroeconomic Research Office.
“The renewed conflict in the Middle East and the imminent El Niño during the latter part of 2026 will result in further supply constraints that will certainly pose inflationary pressure on the economy not only this year but beyond,” CPBRD added.
Other inflationary risks cited by the think tank include extreme weather and natural calamities, elevated electricity prices, peso depreciation and wage adjustments.
To curb persistent price pressures, CPBRD said the Marcos administration should consider a more conservative fiscal policy through a “leaner, smarter” 2027 national budget.
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