Philippine inflation hits 7.2 per cent as banks expect October rate hike

Philippine inflation reached 7.2 per cent in September, prompting Bank of the Philippine Islands (BPI), Chinabank Research and Fitch Solutions’ BMI to forecast an October interest-rate increase. All three expect the Bangko Sentral ng Pilipinas to raise its benchmark by 25 basis points, taking it from five per cent to 5.25 per cent.

The September reading was up from 6.1 per cent in August and matched April’s level. Core inflation, a measure excluding volatile food and energy prices, increased from 4.1 per cent to 4.7 per cent.

BPI lead economist Emilio Neri Jr. expects another increase in December, bringing the policy rate to 5.50 per cent at year-end. He said additional tightening could take the rate to six per cent during the first half of 2027, depending on El Niño’s severity. A 50-basis-point increase at one of the remaining 2026 meetings was also possible, he said.

Chinabank Research forecasts that inflation will climb further before peaking in November. It identified substantial transport fare increases and drier conditions as risks, with higher food and oil costs spreading to other prices.

BMI raised its year-end rate forecast from five per cent to 5.25 per cent, but expects tightening to end after October because of weak economic activity. It also increased its average inflation projections for 2026 from 5.7 per cent to 5.9 per cent, and for 2027 from 4.7 per cent to five per cent.

Nomura expects headline inflation to stay around seven per cent in the fourth quarter. It retained its 2026 average forecast of 5.8 per cent and projects an easing to 3.4 per cent in 2027 as supply pressures diminish.