‘Inflation to remain well above target’

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August 1, 2026 | 12:00am

July rate may hover at 5.6-6.6 percent

MANILA, Philippines — Inflation could either ease or accelerate in July from the previous month, but is expected to remain well above the government’s target as elevated fuel and electricity costs and a weaker peso continue to put pressure on consumer prices.

The Bangko Sentral ng Pilipinas (BSP) said inflation likely settled between 5.6 and 6.6 percent in July, a range that straddles the 6.4-percent print recorded in June.

Even at the lower end of the forecast, however, inflation would remain above the BSP’s three percent target. 

“Upside price pressures during the month could stem from elevated domestic petroleum pump prices, higher electricity rates, increasing fish prices, and the depreciation of the peso against the strengthening dollar,” the BSP said. 

These pressures may be partly offset by cheaper key food items, particularly rice, meat, vegetables and fruits.

“The BSP will remain vigilant and guided by incoming data, particularly on inflation and growth prospects,” the central bank said. 

“It will continue to monitor recent developments in the Middle East for their impact on inflation and economic activity,” it added.

Inflation has risen sharply this year after staying subdued for much of 2025, largely reflecting the impact of the Middle East conflict on oil and other commodity prices.

Average inflation stood at 4.8 percent in the first half, more than double the 1.8 percent recorded in the same period last year. The renewed inflation surge has prompted the BSP to reverse course on monetary policy this year.

The BSP has raised policy rates by 50 basis points this year, bringing its key interest rate to 4.75 percent after consecutive 25-bp hikes in April and June.

BSP Governor Eli Remolona Jr. earlier this month said the economy could still absorb another 25-basis-point increase despite weak growth, noting that interest rates remain relatively low after adjusting for inflation.

More recently, Remolona said there is a chance the Monetary Board could deliver a larger 50-basis-point hike at its Aug. 27 meeting if inflation risks worsen, although he described the likelihood of such a move as small.

The July inflation reading will therefore be among the key data points policymakers will consider as they determine whether further monetary tightening is needed to prevent persistent price pressures from becoming more entrenched.