Philippine inflation hits 7.8%, squeezing low-income households

MANILA — Philippine inflation accelerated to 7.8% in October 2026 from 7.2% in September, driven mainly by higher fuel prices and transport fares, further squeezing household budgets as consumer prices continued to rise.

The latest inflation reading, the highest since February 2023, underscores the growing pressure on Filipino consumers, particularly low-income households that spend a larger share of their earnings on food, transportation, and other essential goods and services.

The Bangko Sentral ng Pilipinas (BSP) said the October figure was within its forecast range of 7.1% to 8.1%, consistent with expectations that inflation would remain elevated in the coming months.

Data from the Philippine Statistics Authority (PSA) showed that the transport inflation rate surged to 20.1% in October from 14.6% in September, reflecting the impact of rising fuel prices and transport costs.

Inflation for housing, water, electricity, gas, and other fuels also accelerated to 9.3% from 8.4% in the previous month.

The increases highlight how higher energy and transportation expenses can affect household spending and business operating costs, potentially adding pressure on the prices of other goods and services.

Average headline inflation for the first 10 months of 2026 reached 5.6%, exceeding the government’s full-year inflation target of 3% and its tolerance range of 2% to 4%.

The sustained breach of the target indicates that consumer prices are increasing faster than the pace considered consistent with the BSP’s medium-term price stability objective.

Core inflation, which excludes selected volatile food and energy items, also accelerated to 5.4% in October from 4.8% in September.

The increase suggests that price pressures have spread beyond fuel and other volatile commodities, making inflation more difficult to contain.

The impact was particularly severe among households belonging to the lowest 30% income group, whose inflation rate increased to 9.5% in October from 9% in September.

This means that the cost of the goods and services typically purchased by these households rose faster than the national average, further eroding their purchasing power.

For families with limited disposable income, sustained price increases can force difficult spending decisions, including reducing purchases of nonessential goods or adjusting budgets for food, transportation, education, and healthcare.

Although national food inflation eased slightly to 6.4% in October from 6.8% in September, prices of several staple commodities continued to register substantial annual increases.

Rice inflation accelerated to 20.7% from 20.3%, while corn inflation increased to 19.3% from 17.3%, according to PSA data.

These developments are particularly concerning for lower-income households because food accounts for a substantial portion of their consumption expenditures.

The BSP said it would remain vigilant and continue assessing incoming economic data to determine the appropriate monetary policy response.

The central bank will also closely monitor developments in the Middle East, where geopolitical tensions could affect international energy markets and domestic fuel prices.

Higher global oil prices can increase transportation, electricity, and production costs in the Philippines, which depends heavily on imported petroleum products.

The BSP also identified ongoing El Niño conditions as another risk to the inflation outlook.

Prolonged dry weather could affect agricultural production, water availability, and food supply, potentially creating additional upward pressure on commodity prices.

These risks complicate efforts to stabilize inflation while supporting economic growth, particularly as businesses and consumers adjust to higher borrowing and operating costs.

The BSP has raised its benchmark policy interest rate to 5.5% as part of efforts to contain inflationary pressures and keep inflation expectations anchored.

Higher interest rates can help moderate demand and inflation but also increase financing costs for households and businesses seeking loans.

The central bank said its future policy decisions would remain guided by incoming data and its assessment of risks to inflation and economic growth.

With inflation remaining well above the government’s target, restoring price stability will be crucial to protecting household purchasing power, sustaining consumer spending, and supporting a more stable economic environment.