Philippine inflation tops estimates on pricier food, fuel

Philippine inflation gained pace again and exceeded economists’ estimates in September as food and fuel prices surged, backing the case for the central bank to further raise its policy rate.

Consumer prices rose 7.2% last month from a year earlier, the statistics agency reported Tuesday. The latest inflation print ends four months of deceleration, and tops the median estimate of 6.8% in a Bloomberg News survey.

Faster rice and vegetable inflation drove the headline figure higher, after monsoon rains triggered widespread flooding that destroyed farms last month. Gasoline and diesel cost increases also accelerated as global oil prices climbed on renewed conflict in the Middle East.

The above-estimate reading supports further monetary tightening from the Bangko Sentral ng Pilipinas, which has raised its policy rate by a cumulative 75 basis points since April. Governor Eli Remolona earlier flagged further price risks from the El Nino weather effect and wage hikes. The next policy decision is scheduled for Oct 22.

The statistics agency also warned of further inflationary threats, particularly on food items like rice. The benchmark stock index edged lower after the inflation data release, while the peso weakened against the US dollar.

Inflation has been exceeding the central bank’s 3% target since the Iran war erupted, triggering a global energy supply shock and oil price surges that hit import-dependent nations like the Philippines. The peso’s weakness against the US dollar also exacerbated inflation.

Elevated inflation risks further slowing consumption in the Philippines, which posted the second-weakest growth among major Southeast Asia economies in the second quarter.