Inflation steadies at 1.7% in October

MANILA, Philippines, November 9 ------ Inflation held steady at 1.7 percent in October from the previous month amid slower food price increases. In a press conference, National Statistician Dennis Mapa said that headline inflation – the change in the average cost of consumer goods and services – stood at 1.7 percent in October, unchanged from the previous month.

The October inflation print, however, was lower than the 2.3 percent print in the same month last year. It was within the Bangko Sentral ng Pilipinas (BSP) forecast for the month of 1.4 to 2.2 percent, but below the government’s two to four percent target range for the year. “The outlook for inflation is generally benign, remaining well within the target range over the policy horizon,” the BSP said in a statement. It added that inflation is projected to average below the low end of the target range for 2025, largely due to the easing of rice prices in previous months.

From January to October, average inflation also stood at 1.7 percent. Food and non-alcoholic beverages had a slower inflation of 0.5 percent in October from the previous month’s one percent. Inflation for food alone also registered a 0.3-percent increase in October, slower than the previous month’s 0.8 percent.

The slowdown was driven mainly by the slower increase in vegetables to 16.6 percent in October from 19.4 percent in September. Meat inflation also slowed to 5.2 percent in October from six percent in the previous month. Rice inflation registered a slightly faster decline to 17 percent in October from 16.9 percent in September.

Department of Economy, Planning and Development Secretary Arsenio Balisacan said the latest data reflected the government’s proactive measures to manage supply conditions and protect families from potential price pressures. “The steady headline inflation rate shows that our coordinated interventions are helping to maintain adequate supplies and keeping essential goods affordable,” he said. “We remain vigilant in managing risks from weather disturbances, global market volatility and other domestic factors that may affect prices in the coming months,” he said further.

While declining prices of rice and corn are expected to contribute to easing inflation, Mapa said there are other food items that pose threats. “In food, there are items with increasing prices like fish and vegetables. Vegetables are sensitive to weather conditions,” he said. He said the transport commodity group is also seen as a possible source of upward pressure on overall inflation given recent adjustments in pump prices. “We are monitoring this,” Mapa said.

For the last two months of the year, Moody’s Analytics assistant director-economist Sarah Tan said in an email that inflation is likely to remain below the government’s two to four percent target, with food prices, particularly rice, expected to stay at low levels due to abundant domestic supply. “The extension of the temporary rice import suspension until year-end is not expected to cause a price spike in the near term, although the policy will need careful calibration to avoid a sharp rebound in rice prices once the harvest season winds down, especially in early 2026,” she said.

For 2026 and 2027, the BSP expects inflation to settle within the two to four percent target range, noting that inflation expectations remain well-anchored. While potential electricity rate adjustments and possible increases in rice import tariffs could introduce some upward pressures, the BSP said risks to the overall inflation outlook are limited as global commodity prices stabilize. “The Monetary Board likewise noted that the outlook for domestic economic growth has weakened,” the BSP said. It attributed this to the dampening effect of governance concerns surrounding public infrastructure spending on business confidence as well as lingering uncertainty in the global environment. “Going forward, the Monetary Board will continue to review newly available information and reassess the impact of prior monetary actions in light of evolving economic conditions and their implications for inflation and growth,” the BSP added.

HSBC economist for ASEAN Aris Dacanay said the BSP may have gained confidence to further ease monetary policy in December after the “slight downside surprise” in consumer price index (CPI). He noted that headline inflation softened as rice prices continued to fall, despite the ongoing import ban that remains in effect until December. “Rice CPI fell by 17 percent year-on-year, which was a slightly faster fall relative to the previous month,” he said. “Meat and dairy prices, too, decelerated substantially — enough to offset the pickup in utility prices, such as electricity.”

Looking ahead, Dacanay said the government’s move toward a flexible tariff regime on rice imports could help stabilize prices in 2026. “If successfully implemented, rice will neither be inflationary nor deflationary to the overall consumer price basket as any price adjustments internationally will just be offset by a change in tariff rates,” he said. He added that both the benign inflation print and policy clarity on rice “strengthen the case for a December rate cut by the BSP,” aligning with HSBC’s baseline view of a 25-basis-point reduction to 4.50 percent by year end. “With no issues in inflation, monetary policy has the runway to pump the economy to, hopefully, offset the fiscal fallout brought by a sharp drop in public infrastructure spending,” Dacanay said.

He estimated that “for every 10 percent drop in public infrastructure spending, growth could decline by 0.4 to 0.6 percentage points,” noting that infrastructure spending has fallen by more than 20 percent year-on-year in recent months. The BSP has cut policy rates by a total of 175 basis points since August 2024, including a 25-basis-point reduction in October, bringing the benchmark rate to 4.75 percent as it seeks to bolster growth while keeping inflation under control.

Source: philstar.com