Philippine inflation eases to 6.1% in August, still well above target
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Key points
- August CPI inflation was 6.1% year on year (down from 6.2% in July; fourth consecutive monthly slowdown), per PSA data.
- The January–August average of 5.2% remains above the government's 2–4% target.
- BSP raised its policy rate to 5.0% on 28 August and set its 2026 average inflation forecast at 6.1%.
Implications
Facts
Headline: CPI inflation was 6.1% year on year in August 2026 (down from 6.2% in July; fourth consecutive monthly slowdown). The January–August average was 5.2%. Source: Philippine Statistics Authority (PSA) release as reported by GMA News on 4 September. 1
Components: food and non-alcoholic beverages inflation was 4.6% (down from 5.2% in July); housing, water, electricity, gas and fuels was 7.9% (down from 8.2% in July). Same source.
Monetary policy: on 28 August 2026 Bangko Sentral ng Pilipinas (BSP) raised the overnight reverse repurchase rate to 5.0% (raised from 4.75% on 28 August 2026), after an increase to 4.75% on 18 June, and set its 2026 average inflation forecast at 6.1% (lowered from 6.4% at the June 2026 meeting), with 5.4% for 2027. 2 3 The June increase was reported by the Philippine News Agency. 4
Analysis
Regionally, Philippine inflation of 6.1% is roughly double Indonesia's 3.19% (August, BPS) and well above Malaysia's 1.8% January–July average (BNM). The BSP governor has cited elevated oil and fertiliser prices and broadening second-round effects, pointing to supply-driven inflation. Even as the rate of increase slows, the price level keeps rising cumulatively, so pressure on household real incomes persists.
Counterpoints and uncertainties
If the slowdown continues, BSP could stop tightening before year-end. Some expect faster disinflation via lower oil and food prices if the Middle East situation calms.
Key figures
- Headline CPI inflation (PSA): 6.1% (down from 6.2% in July; fourth consecutive monthly slowdown). Year-on-year change in the consumer price index. Philippines, national. Basis date: 31 Aug 2026. Source: GMA News: Inflation slows down for fourth straight month at 6.1% in August
- BSP policy rate (overnight reverse repurchase rate): 5.0% (raised from 4.75% on 28 August 2026). BSP target overnight reverse repurchase rate after the Monetary Board decision. Philippines, national. Basis date: 28 Aug 2026. Source: Inquirer: BSP raises policy rate to 5%; peso sinks to new low (2026-08-28)
- BSP average inflation forecast, 2027 (August 2026 meeting): 5.4% (raised from 4.5% at the June 2026 meeting). BSP baseline forecast of average annual CPI inflation, 2027. Philippines, national. Basis date: 28 Aug 2026. Source: Inquirer: BSP raises policy rate to 5%; peso sinks to new low (2026-08-28)
- BSP overnight reverse repurchase rate after June hike: 4.75% (raised by 25 bp on 18 June 2026). BSP key policy rate (overnight RRP). Philippines, national. Basis date: 18 Jun 2026. Source: Philippine News Agency: BSP hikes policy rates by another 25 basis points (2026-06-18)
Sources
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A Japanese version of this article is available: 日本語版