7.2% high inflation rate weakens Philippine peso — economist

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

October 9, 2026 | 12:58pm

MANILA, Philippines — The value of the Philippine peso is being eroded by the 7.2% high inflation rate recorded in September, making the country’s currency less attractive for investors while further putting pressure on households and businesses, an economist said.

After the Philippine peso closed at a record low of P62.9 against the US dollar on October 8, economist Emmanuel Leyco pointed out on Friday, October 9, that the rapid rise in consumer prices primarily affected the struggling peso. 

Leyco explained that even the 5% interest rate hike by the Bangko Sentral ng Pilipinas (BSP) in August is being outweighed by the surge in inflation. 

The 5% interest rate set by the BSP is the benchmark used to influence the cost of borrowing and spending across the country to help control inflation. As the benchmark rises, borrowing and spending become more expensive. 

“Ibigsabihin po niyan ay kinakain ng inflation ang ating pera,” Leyco said in an interview with Super Radyo dzBB. “Iyan po ay malaking problema para sa piso.”

(That means our currency is being “eaten” by inflation. That’s a big problem for the pesos.)

Consequences

According to Leyco, with the weakened peso,  investors are shifting toward the US dollar as its interest rates are more competitive against the American inflation rate. 

This, in turn, could result in a complex trade-off for the BSP in deciding whether to further increase or keep the interest rate. 

Increasing the interest rates, Leyco said, will create difficulties for business owners and individuals who have to take loans, as they have to pay higher interest. Keeping it low, meanwhile, will only make the peso less attractive for investors.

Leyco also stressed that the impact is more significant on ordinary households as the depreciation of the peso directly affects the costs of imported essential goods, such as oil and rice, further driving up inflation.

“Hindi lamang po ito problema ng Bangko Sentral. Ito ay problema ng buong pamahalaan. Ang atin pong inflation ay napakataas. So dapat po 'yan tutukan, ano ba ang nagtutulak para tumaas ang inflation?” Leyco said.

(This is not Bangko Sentral’s problem only. This is a problem of the whole government. Our inflation is too high. So, that must be addressed: what causes the surge in inflation?)

Proposed gov’t intervention

Leyco proposed certain government interventions to resolve what he described as a government-wide concern.

For one, the economist said that while the government cannot interfere with the conflict between the USA and Iran, it still has the capacity to influence the prices of domestic oil and fuel products by suspending the excise tax.

“Malaking bagay po yan, 'yung P6, 'yung P10 eh malaking ah awas na po 'yan kada litro na binibili ng ating merkado, ng ating mga mamamayan,” Leyco said.

(That’s a significant thing, the P6, P10 per liter is a big relief in our market, for the public.)

In September, President Ferdinand Marcos Jr. suspended the excise tax on kerosene and LPG products, but left out gasoline and diesel to avoid government revenue loss and due to concerns that it will only benefit wealthier households rather than the low-income groups. 

Leycos, however, pointed out that what the government needs to do is to strengthen purchasing power. 

“Kapag ang purchasing power ang talagang humina eh ang makikita ulit natin sa susunod na pag-uulat ng pamahalaan ay bumabagal ang ating ekonomiya. Bakit? Kasi bumagal na po ang consumption ng ating mga mamamayan,” Leyco said.

(When the purchasing power really declines, we will see on the next government reports that our economy has slowed. Why? Because the public’s consumption has decelerated.)

Leyco also said that while he agrees to wage increases, the government must also help the small businesses cope with the rising operating costs by implementing tax holidays.

“Meron pong mga negosyante, mga dayuhang negosyante, nagkakaroon po sila ng tax holiday (ng) isang taon, limang taon. Eh bakit hindi natin bigyan ng tax holiday 'yung mga maliliit na negosyante,” Leyco said.

(There are big businesses, foreign businesses, who have tax holidays for one year, five years. Why don’t we also give tax holiday to our small business owners?)