Philippine inflation likely accelerates as fuel, power and food costs rise

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Philippine inflation outlook October

Highlights

Consensus from 22 analysts sees Philippine October headline inflation accelerating to 7.6%, up from 1.7% a year ago and exceeding previous 2023 peaks.
Pump prices in Metro Manila by end-October reach P75.10–P101.10 for gasoline, P88–P102.5 for diesel, and P116–P145.34 for kerosene after mixed monthly movements.
Manila Electric Co. increases power rates by 31.91 centavos/kWh to P15.0615, while recent fare hikes and surging food prices further pressure household budgets and inflation.

October price outlook before PSA release

As reported by BusinessWorld Online, a poll of 22 analysts and economists points to headline inflation of 7.6% in October, up from 1.7% a year earlier. If realized, that would exceed this year's previous 7.2% peaks in April and September and mark the fastest inflation pace in nearly four years, matching the March 2023 reading and trailing only the 8.6% logged in February 2023.

The Philippine Statistics Authority is set to release the October inflation data on Thursday, Nov. 5. A 7.6% outcome would also bring the 10-month average headline inflation to 5.6%, extending the period in which price growth stays above the Bangko Sentral ng Pilipinas' target band.

Analysts say higher fuel, electricity and food costs, combined with the peso's sustained weakness, are driving the expected acceleration. Alain Jomarie G. Santos, chairman of the Department of Economics at the University of Santo Tomas, says the uptick is linked to higher gas prices, more expensive electric bills and increased commute fares, while instability in global oil markets tied to conflict in the Middle East adds pressure to transport and utility costs.

Transport and food pressures keep risks elevated

Oil price adjustments in October are mixed, with gasoline falling by as much as P1.11 a liter and diesel by P0.52 a liter, while kerosene rises by as much as P4.57 a liter. By the end of October, pump prices in Metro Manila and nearby areas range from P75.10 to P101.10 for gasoline, P88 to P102.5 for diesel, and P116 to P145.34 for kerosene.

Transport and electricity charges also add to household costs. The Land Transportation Franchising and Regulatory Board approves fare hikes for all public utility vehicles effective Sept. 28, while Manila Electric Co. raises power rates by 31.91 centavos per kilowatt-hour to P15.0615 from P14.7424 in September, adding P64 to the monthly bill of homes consuming 200 kWh.

Food prices remain another major source of inflation pressure. Marites M. Tiongco, a professor at the De La Salle University Carlos L. Tiu School of Economics, says rice, fish and vegetables are key contributors after food and non-alcoholic beverage inflation accelerated to 6.7% in September from 4.6% in August, with weather-related supply disruptions and El Niño concerns creating upside risks for October.

S&P Global Market Intelligence Principal Economist Harumi Taguchi also sees higher fruit and rice costs lifting inflation, partly because of base effects from lower rice prices a year earlier. China Banking Corp. Chief Economist Domini S. Velasquez, however, says prices of most major food items ease last month, suggesting some areas of relief within the broader inflation picture.

In our earlier article on conflict-driven spikes in oil shipping costs, we explained how attacks and rerouted tanker traffic were sharply raising freight and insurance rates on key routes such as the Strait of Hormuz and the Red Sea. We noted that these higher transport costs can filter through from crude prices into pump prices and, ultimately, broader consumer inflation—especially in import-dependent markets including the Philippines.

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