BSP sees higher inflation path

The Bangko Sentral ng Pilipinas said inflation pressures have worsened after April 2026 inflation rose to 7.2 percent, exceeding the central bank’s forecast range and raising the risk that inflation could stay above target through 2027.

The April inflation rate was higher than the BSP’s announced forecast range of 5.6 percent to 6.4 percent.

The BSP said the latest reading highlighted upside inflation risks from the global oil price shock, which pushed up transport-related costs after a sharp increase in domestic fuel prices.

Year-on-year headline inflation accelerated to 7.2 percent in April from 4.1 percent in March, reflecting the impact of higher international fuel prices on food and energy costs.

Average inflation from January to April settled at 3.9 percent, above the BSP’s 3.0-percent target for the full year.

The BSP’s inflation target for 2025 to 2028 is 3.0 percent, with a tolerance band of plus or minus 1.0 percentage point, or 2.0 percent to 4.0 percent.

The central bank said average headline inflation is now seen to breach the 4.0-percent tolerance ceiling in both 2026 and 2027.

The BSP said inflation expectations have risen further, heightening the risk of de-anchoring from the 3.0-percent target because of more persistent inflationary pressures.

Upside price pressures also came from higher prices of key food items, including rice, because of lower-than-expected palay production in the first quarter of 2026.

Rice and fish prices rose due to higher post-harvest and transportation costs.

Transport inflation increased with higher domestic petroleum prices at the pump.

Electricity rates also rose because of higher generation charges.

Inflation for households with incomes in the lowest 30 percent of the population accelerated to 8.5 percent in April from 4.2 percent in March.

The increase means low-income households faced faster price growth than the headline rate, reflecting the heavier weight of food, transport, and utilities in their spending.

On a month-on-month seasonally adjusted basis, headline inflation rose to 3.0 percent in April from 1.6 percent in March.

Core inflation, which excludes volatile food and energy items, increased to 3.9 percent in April from 3.2 percent in March.

The BSP said the rise in core inflation and the broad-based increase in services inflation point to possible further broadening of underlying price pressures.

The central bank said the inflation outlook has deteriorated further amid the ongoing conflict in the Middle East, with global oil and fertilizer prices rising considerably in recent months.

The Philippines is vulnerable to global oil shocks because it imports much of its fuel requirements, making local pump prices and transport costs sensitive to movements in international crude prices.

The BSP said the Monetary Board will continue to be guided by incoming data.

“The BSP stands ready to take all necessary monetary actions to ensure that inflation returns to the 3-percent target, consistent with its primary mandate of maintaining price stability,” the central bank said.

The BSP also said it remains committed to fulfilling its mandate of slow inflation and will act as needed to bring inflation back to its 3.0-percent target within a reasonable time.

The central bank said it will remain vigilant for spillover effects, data-driven, and ready to act as needed.