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BSP: Food costs from storms may have quickened August inflation; price drop ends
Business
The Economy
BSP: Food costs from storms may have quickened August inflation; price drop ends
BSP: Food costs from storms may have quickened August inflation; price drop ends
By Derco Rosal
Published Sep 1, 2025 12:00 am
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Updated Aug 30, 2025 01:34 pm
At A Glance
- Consumer prices may have risen at a faster pace in August, the central bank projected, as recent typhoons and excessive rainfall likely stoked the cost of basic goods such as vegetables and fish.
Consumer prices may have risen at a faster pace in August, the central bank projected, as recent typhoons and excessive rainfall likely stoked the cost of basic goods, especially food items.
Last month’s inflation is expected to clock within the range of one percent to 1.8 percent, according to the forecast by the Bangko Sentral ng Pilipinas (BSP). This projection is higher than the actual headline rate of 0.9 percent of July.
“Upward price pressures for the month are likely to arise from higher costs of fruits, vegetables, and fish due to unfavorable weather conditions,” the BSP said in a statement last Friday, Aug. 29.
“Higher electricity rates, elevated domestic fuel costs, and the depreciation of the peso likewise contribute to upside price pressures,” the BSP added.
But rice prices—which dropped at their fastest pace since 1995—alongside cheaper meat, are expected to partially offset these upward price pressures, the central bank said.
Deutsche Bank Research’s forecast is a one-percent inflation rate for August, “[staying] broadly unchanged” from the previous month’s nearly six-year low, it said in an Aug. 29 report.
Singapore-based DBS Bank Ltd. anticipates consumer price increases to have quickened to 1.2 percent year-on-year.
“Inflation numbers are expected to remain largely steady in Indonesia and the Philippines in August,” DBS Group Research said in an Aug. 29 report.
BSP Governor Eli M. Remolona Jr. noted earlier that the central bank’s inflation outlook remains “broadly unchanged,” with forecasts at 1.7 percent for 2025, 3.3 percent for 2026, and 3.4 percent for 2027.
For DBS, these within-target inflation expectations anchor the BSP’s still dovish tilt, despite Remolona’s assertion of a lesser degree.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., sees inflation to have accelerated by 1.4 percent in August.
“It’s still soft, mainly because rice prices stayed low and consumer demand hasn’t picked up much. But we did see some upward pressure from typhoon-related disruptions—especially in food items like fish and vegetables,” Ravelas said.
Capital Economics senior Asia economist Gareth Leather forecasts an even higher August inflation rate of 1.5 percent, even as the think tank expects annual price hikes to average 1.6 percent in 2025, lower than end-July’s 1.7 percent.
Japanese financial giant MUFG Bank Ltd. noted that the median survey puts headline inflation in the Philippines at 1.2 percent for last month.
“Inflation across Indonesia, the Philippines, Taiwan, and South Korea is expected to stay subdued, giving central banks room to ease,” MUFG Global Markets Research said in an Aug. 29 report.
Notably, Pantheon Macroeconomics argued that “the long-running downturn in inflation has bottomed out,” which the think tank expects to be reflected in the August inflation data to be released on Friday, Sept. 5.
“But we expect any re-acceleration to remain contained for the time being, keeping the headline rate underneath the BSP’s two- to four-percent target range until early 2026,” said Miguel Chanco, Pantheon Macroeconomics’ chief emerging Asia economist.
Meanwhile, Citi expects succeeding months’ inflation print to remain “below the floor” of the central bank’s target range until February next year. Remolona affirmed this in his Bloomberg interview last week, noting that he expects inflation to clock in below two percent for this year.