Storms fuel 1.5% Aug. prices hike

Storms fuel 1.5% Aug. prices hike | Daily Tribune

The recent bad weather that hit the country pushed up prices of basic commodities by 1.5 percent in August from 0.9 percent in July, the Bangko Sentral ng Pilipinas (BSP) reported Friday.

The figure falls within the BSP’s forecast range of 1.0 to 1.8 percent, bringing the year-to-date average to 1.7 percent — still below the government’s target of 2 to 4 percent.

Food inflation climbed as storms and floods disrupted supply, particularly of vegetables and fish. Fuel costs also added pressure, reversing the slowdown seen in July. On the other hand, rice prices continued to decline due to adequate domestic supply, softer global prices, and government stabilization measures.

Month-on-month, inflation was at 0.5 percent in August, while core inflation picked up to 2.7 percent from 2.3 percent in July.

The BSP said inflation is projected to remain below target for 2025 but will return to the 2 to 4 percent range in 2026 and 2027.

The central bank vowed to “monitor emerging risks to inflation and determine the appropriate response of monetary policy” to support growth and employment.

Uptick signals pressure

Robert Dan Roces, an economist at SM Investments Corp., in an interview with DAILY TRIBUNE, said the increase may be signaling the resurfacing of inflationary pressures, though still at a low and manageable level.

“The move reflects firmer food, housing, and services costs, while transport continues to ease overall price growth,” Roces noted.

“For businesses, it means consumers retain some spending power, but the widening price pressures suggest vigilance is needed — especially as higher NCR housing costs could pinch household budgets more than in the rest of the country.”

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., observed that the August print was the fastest in five months, driven by supply shocks from storms and typhoons.

“Local inflation was faster than expected at 1.5 percent year-on-year in August 2025, largely due to higher food and vegetable prices amid the series of storms, typhoons, and floods, ahead of the 60-day ban on rice imports,” Ricafort said.

He noted that rice inflation decreased by 17 percent in August, which helped to cushion the overall increase. He said inflation remains “relatively benign” and could average 1.8 percent for 2025 — still below the BSP target.

This outlook, he added, may support possible 25-basis point rate cuts in the BSP’s October or December policy meetings, in line with anticipated rate adjustments by the US Federal Reserve.

Still, Ricafort warned that base effects may lead to a gradual pickup in inflation toward the two-percent level for the rest of the year, bringing the figure back into the BSP’s target range after six straight months of undershooting.