Philippine inflation seen peaking in November as El Niño, holiday demand add pressure

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Philippine inflation November peak

Highlights

Philippine inflation reached 7.2% in September, with economists expecting a November peak between 7.3% and 8.2% due to El Niño and holiday demand.
The Bangko Sentral ng Pilipinas has hiked rates by 125 basis points since April, bringing the benchmark policy rate to 5.5% as it projects 6.1% inflation this year.
Pantheon Macroeconomics expects inflation to stay above the BSP's target until at least April 2025, citing persistent risks from global oil prices and food inflation.

Economists outline November inflation path

As reported by BusinessWorld Online, economists expect Philippine inflation to climb further in November as persistent cost pressures combine with weather-related supply risks and seasonal demand. S&P Global Market Intelligence Principal Economist Harumi Taguchi says headline inflation could peak in November 2026, depending largely on developments in the Middle East and the effects of El Niño.

The state weather bureau says a strong to very strong El Niño is active in the Tropical Pacific and is expected to peak before the year ends, lasting until the first quarter of 2027. Dry conditions typically linked to El Niño could strain agriculture, water supply and energy production, adding to broader price pressures across the economy.

University of Santo Tomas Department of Economics Chair Alain Jomarie G. Santos says inflation could range from 7.3% to 8.2% in November before easing in December. He says households and businesses are still adjusting to recent spikes in fuel and electricity bills, although price increases should begin to level off once higher energy costs settle.

Inflation reached 7.2% in September, the highest reading so far this year, amid renewed increases in oil, food and utility costs. The median estimate in a poll of 22 analysts points to 7.6% inflation in October, which, if realized, would be the fastest pace in nearly four years and would match the March 2023 reading.

Central bank outlook and year-end risks

Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. says it might take a few more months before inflation hits its peak, while Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion expects the peak to come in the fourth quarter and sees full-year 2026 inflation averaging 5.9%. The central bank projects inflation at 6.1% this year, 6% next year and 3.3% in 2028.

Several economists also see holiday spending adding pressure in the final months of the year. Security Bank Corp. Chief Economist Angelo B. Taningco expects inflation to remain above 7% in the last two months of the year, with a possible November peak, while University of Asia and the Pacific Economist Marco Antonio C. Agonia says inflation could move above 8% by December if holiday demand is stronger than expected and oil prices stay elevated.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco projects inflation to peak earlier, at 7.3% in October, but says risks remain tilted upward because of global oil prices and food inflation. He also says a return to the BSP's target range is unlikely until April next year.

The BSP remains on a tightening path as it expects inflation to stay above target over the next two years. Since April, the central bank has delivered a total of 125 basis points in rate hikes, including a larger-than-expected 50-basis-point increase at its Oct. 22 meeting that brought the benchmark policy rate to 5.5%; the Monetary Board holds its last rate-setting meeting of the year on Dec. 17.

In our earlier article on the surge in oil shipping costs, we explained how conflict-driven disruptions on key tanker routes are sharply increasing freight and insurance premiums, turning transport into a much larger share of the final oil price. We also noted that import-dependent economies, including the Philippines, are particularly exposed as higher logistics costs can filter through from fuel into food and other consumer prices.

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