Inflation inched up slightly in September to 1.7 percent from 1.5 percent in August, according to data cited by the Bank of the Philippine Islands (BPI), though still below market expectations of a 1.9 percent increase.

Core inflation – excluding volatile food and energy prices – eased marginally to 2.6 percent from 2.7 percent a month earlier. On a year-to-date basis, average inflation stood at 1.7 percent, with core inflation averaging 2.4 percent.

BPI said inflation remained “manageable in general,” with only marginal changes from the previous month. Rice prices were “almost steady” month-on-month as import restrictions took effect, though they still posted a 16.9 percent year-on-year decline. Vegetable prices, however, surged 19 percent from a year earlier as typhoon-related disruptions continued to affect the agriculture sector.

Meanwhile, stable conditions in the global oil market helped temper price pressures on transport and utilities, the bank added.

Looking ahead, BPI noted that inflation risks remain tilted to the upside as favorable base effects fade and rice import restrictions continue to limit further price declines. The bank warned that supply disruptions in certain food items, such as vegetables, could keep prices elevated in the coming months.

Imports from China – particularly those redirected from the US – may help ease some of these pressures. Still, BPI expects inflation to hover near 2 percent for the remainder of the year before rising to around 3.5 percent by mid-2026 and approaching 4 percent by the third quarter of next year.

BPI noted that the inflation risks

With inflation likely to pick up, the bank said the pace of monetary easing could slow. “A more conservative approach is justified as cutting rates aggressively could leave the economy vulnerable to inflation shocks that might force a sharp policy reversal later on,” BPI said.

Another rate cut from the Bangko Sentral ng Pilipinas (BSP) remains possible this year, depending on the upcoming GDP data in November. Further easing could happen in 2026 if economic growth loses momentum, most likely in the first half before inflationary pressures build in the latter part of the year.