Philippine inflation climbed to 7.2% in September, a five-month high that ended four straight months of easing, the Philippine Statistics Authority said Oct. 6. Economy, Planning and Development Secretary Arsenio Balisacan said the rise was driven mainly by weather-related food supply disruptions and higher global oil prices.
The figure came in well above the 6.8% median forecast from 19 economists polled by the Inquirer and near the top of Bangko Sentral ng Pilipinas’s projected range of 6.4% to 7.4%. It also pushes inflation further from the government’s 3% target.
The jump from 6.1% in August leaves the central bank in a difficult position ahead of its October 22 policy meeting.
What drove the September spike
Food and non-alcoholic beverages were the top contributors to September inflation, followed by housing, water, electricity, gas and other fuels, and then transport.
Monsoon rains and four tropical cyclones (Luis, Maymay, Neneng, and Pilandok) damaged about P4.38 billion worth of agricultural produce, the government said, tightening food supply nationwide. Local oil companies also raised pump prices three times during the month amid a prolonged war in the Middle East, according to data from the energy department.
The currency added more pressure. The peso weakened to nearly P63 against the dollar in September, raising the cost of imported goods.
Eugene Tan of Moody’s Analytics, one of the economists polled by the Philippine Daily Inquirer ahead of the release, pointed to the weak peso as a driver of broader price increases beyond energy. Nomura also said core inflation, which excludes food and energy, may have picked up as higher costs filtered through to consumers. Core inflation rose to 4.7% from 4.1% in August.
BSP faces a tough call on October 22
In August, the BSP raised its benchmark rate by 25 basis points to 5%, its third hike in the current tightening cycle. Policymakers cited risks from a severe El Niño and upcoming wage increases. The challenge is containing price pressures without further weighing on an economy that grew only 2.6% in the first half of the year.
Before the data came out, Tan said the BSP could pause and let earlier hikes work through the system, though a hotter-than-expected reading could prompt it to tighten again. Miguel Chanco of Pantheon Macroeconomics said inflation could remain above 6% through the end of the year and that he was “wary that it could bring another rate hike into the picture” at the October meeting despite weak growth.
After the release, Jonathan Ravelas of Reyes Tacandong & Co. said the print raises the probability of a 50-basis-point hike, while Emilio Neri Jr. of the Bank of the Philippine Islands expects 25 basis points in October and again in December, bringing the policy rate to 5.50% by year-end.
What this means for BPO clients and providers
A peso-to-dollar rate near P63 lowers labor costs for dollar-billing BPO providers, but 7.2% inflation cuts into agent pay and will put pressure on salary adjustments and retention incentives. Providers that act early can limit attrition, while clients should expect rate-review discussions at renewal and confirm that their providers have solid continuity plans for potential El Niño–related disruptions.
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Lesaca, Thony Rose. (2026, October 6). September inflation hit 5-month high of 7.2%. Manila Standard. Retrieved from https://manilastandard.net/business/314801978/september-inflation-hit-5-month-high-of-7-2.html
Cigaral, I. N. (2026, October 5). Poll: Sept inflation seen hitting 5-month high on oil, storms. Retrieved https://business.inquirer.net/614223/poll-sept-inflation-seen-hitting-5-month-high-on-oil-storms
