The Philippine central bank, BSP, said on Wednesday, September 30, that inflation in the Philippines may accelerate again in September, which would be the fastest pace in more than three years. BSP expects the consumer price index, or CPI, in September to rise within a range of 6.4% to 7.4% year on year. If the figure comes in at the top of that forecast range, inflation would hit its highest level since March 2023, when it surged to 7.6%, and would move even further away from BSP's target range of 3%. BSP said the expected surge in inflation is mainly due to soaring food prices, as heavy monsoon rains damaged agricultural areas, driving up the prices of vegetables, fish, rice and fruit. Higher domestic fuel prices and the weakening of the peso are also factors putting pressure on goods prices. In August, BSP raised its policy rate by 0.25%, the third increase in this cycle of monetary tightening since April, bringing the benchmark rate to 5%. It said the move was aimed at addressing risks beginning to emerge from the El Niño phenomenon and an imminent wage increase.
BSP's tightening cycle and above-target inflation forecast push Philippine 10Y yields higher.
Rising Philippine inflation and BSP tightening pressure the peso, making USD stronger versus PHP.
