BSP flags inflation risks as September print hits to five-month high

The Bangko Sentral ng Pilipinas on Tuesday flagged supply-side risks from tariffs and food prices, as inflation accelerated for the second straight month to hit a five-month high of 1.7% in September.

According to the central bank, inflation is still expected to settle within the low-end of the 3.0% + 1.0 ppt target range this year due to the easing of rice prices in the previous months, and remain within the band for 2026 and 2027.

“The outlook for inflation is broadly unchanged… Inflation expectations also remain well-anchored,” the BSP said in a statement.

The statement was released in response to the 1.7% inflation print in September, faster than the 1.5% in August, but slower than the 1.9% in September 2024.

“Nonetheless, higher rice tariffs and rising global food prices could raise supply-side pressures over the policy horizon,” the BSP said.

“Meanwhile, higher electricity rates could be offset by expectations of subdued global oil prices owing to a stable production outlook,” it added.

President Ferdinand “Bongbong” Marcos Jr. in August ordered a 60-day ban on rice imports, in a bid to enable the domestic market to absorb the local supply, stabilize prices, and help local farmers sell palay or unmilled rice at a fair and reasonable price.

Agriculture Secretary Francisco Tiu Laurel Jr. earlier said the administration is looking at extending the ban until the end of the year, citing the continued decline in prices of palay in the country.

Tiu Laurel on Monday said the government will lift the ban in January 2026 with possibly higher tariffs, but will reimpose it again from February to April of the same year.

“The Monetary Board observed that domestic demand has held firm. However, the impact of US policies on global trade and investment continue to weigh on global economic activity. this could temper the outlook for the Philippine economy,” the BSP said.

“For the upcoming policy meeting, the Monetary Board will 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,” it added.

The Monetary Board is scheduled to meet on Thursday, October 9, to discuss whether or not current conditions warrant a change in key policy settings.

Key policy rates were cut by 25 basis points for the third straight meeting in August, bringing the target reverse repurchase rate to 5.00%, the overnight deposit rate to 4.50%, and the overnight lending facility rate to 5.50%.—AOL, GMA Integrated News