Inflation slightly cools to 6.1% in August 2026

MANILA, Philippines – Inflation in the Philippines further eased to 6.1% in August, marking the fourth straight month of decline from a three-year high of 7.2% in April, the Philippine Statistics Authority (PSA) said on Friday, September 4.

The August rate was slower than the 6.2% recorded in July, mainly because food inflation eased due to falling vegetable prices and slower increases in fish prices, while electricity inflation also slowed, even as rice and fuel prices remained sharply elevated.

But average inflation from January to August stood at 5.2%, remaining well above the government’s target range of 2% to 4%.

Food and non-alcoholic beverages was the main driver of the deceleration in headline inflation, accounting for 75% of the slowdown. Vegetable prices declined 3.4% from a year earlier after rising 8.4% in July, while fish and other seafood inflation eased to 6.6% from 7.8%. 

Housing, water, electricity, gas, and other fuels accounted for another 21.3% of the slowdown, as electricity inflation eased to 14.4% from 16.9%.

However, the slowdown in food and electricity inflation was partly offset by worsening transport costs. Transport inflation accelerated to 13.5% in August from 11.9% in July, accounting for about one-fifth of overall inflation.

A big reason was fuel prices. Diesel prices were 55.7% higher than a year earlier, which is faster than the 38.6% increase in July, while gasoline inflation likewise climbed to 36.2% from 34.1%. Gasoline alone contributed 0.6 percentage point to headline inflation, while National Statistician Claire Dennis Mapa said higher fuel costs were also feeding into road transport fares.

Worsening rice inflation

The single biggest contributor to inflation for August was rice, adding 1.3 percentage points. Rice inflation accelerated to 19.4% in August from 17.1% in July, its highest rate since July 2024, when it hit 20.9%, according to Mapa.

Rice alone contributed about 3.6 percentage points of the 4.6% food inflation rate, or nearly four-fifths of food inflation, Mapa said.

This comes even as the government continues its flagship P20-per-kilo rice program. Mapa said PSA price collectors do encounter P20 rice in some outlets, and those prices are included in the inflation basket. But the subsidized rice is far from universal.

Regular-milled rice averaged around P46.20 per kilo in Metro Manila and P49.85 outside the capital region in August, he said. Outside Metro Manila, prices had fallen from around P50.04 in June to P49.60 in July before edging up again in August.

“Marami pa rin kasi ‘yung talagang matataas (There are still a lot of outlets with high prices). So it’s not a uniform P20 for all commodity outlets,” Mapa said.

Poorer Filipinos are feeling the pressure even more. Inflation for the bottom 30% income households remained at 8.2%, unchanged from July and far above the national rate. Rice inflation for this group reached 22.5%, accounting for 3 percentage points, or more than a third, of their overall inflation rate.

The Department of Economy, Planning, and Development said the government was providing targeted interventions for vulnerable groups, including more than 700 Kadiwa outlets nationwide and the distribution of over 26,000 metric tons of free rice to more than 2.5 million Filipinos under the Bawat Bayan Makikinabang Program, though it did not specify the period covered by those figures.

Food prices could face renewed pressure in September. Mapa said bad weather and flooding tend to affect vegetables first, with PSA provincial offices already reporting some price increases during the final week of August.

The Bangko Sentral ng Pilipinas (BSP) had projected August inflation to settle between 5.5% and 6.5%. It said higher prices of rice, vegetables, fruits, and fish, partly due to unfavorable weather conditions, as well as elevated domestic fuel costs, were among the factors pushing inflation up. These were expected to be partly offset by lower meat and electricity prices and the peso’s appreciation.

The BSP’s Monetary Board recently raised the benchmark interest rate by another 25 basis points to 5% on August 27, its third consecutive rate increase as the central bank sought to prevent elevated inflation from becoming more persistent. 

At its August meeting, the BSP lowered its forecast for average 2026 inflation to 6.1% from 6.4%, although it substantially raised its 2027 forecast to 5.4% from 4.5%. The central bank expects inflation to return closer to its 3% target midpoint by 2028.

In that meeting, the BSP cited the need to take “preemptive monetary action” to confront the possible inflationary impact of severe El Niño conditions as well as potential wage hike adjustments, including the stalled “historic” Metro Manila wage hike. – Rappler.com