Philippine annual inflation rate slows to 3.3% in August • Core inflation drops to 2.6% • Central bank may consider further rate cuts, says economist • Lower rice tariffs expected to ease inflation further – central bank
The Philippine annual inflation rate dipped to a seven-month low in August, driven by moderating food and transport costs, according to the statistics agency. The consumer price index (CPI) rose by 3.3% year-on-year, down from July’s 4.4%, bringing the average inflation rate to 3.6% for the first eight months of the year, within the central bank’s target range of 2% to 4%.
August’s inflation was the lowest since January’s 2.8%. Economists had predicted 3.6%. Core inflation, excluding volatile food and energy prices, also slowed to 2.6%.
Rice inflation, which makes up about 10% of total inflation, slowed to 14.7%, the lowest since October 2023. National statistician Dennis Mapa mentioned in a briefing that rice prices could drop further in the coming months. “It will likely fall to single digits due to base effects,” Mapa said. President Ferdinand Marcos Jr. reduced rice tariffs from 35% to 15%, but the anticipated price drop has been slower than expected. On Thursday, the central bank stated that lower rice tariffs should help curb inflation in the coming months. Inflation risks remain on the downside for this year and next, with a “slight upward tilt” projected for 2026.U.S. stocks ended mostly lower on Wednesday amid volatile trading, following data that revealed further weakness in the labor market.
“The Monetary Board will continue to take a cautious approach to ensure price stability moving forward,” the Bangko Sentral ng Pilipinas (BSP) said in a statement.According to Nicholas Mapa, an economist at Metropolitan Bank and Trust Co., the August inflation data could give the central bank room for further rate cuts. Mapa noted on social media that “the door to additional cuts this year remains wide open.”
In August, the BSP lowered its benchmark borrowing rate by 25 basis points to 6.25%, marking its first cut since November 2020.
