Philippine inflation quickens to 7.8% in October as transport costs jump

Implications for lenders

With headline inflation at 7.8% and transport costs up 20.1%, affordability checks that rely on older household expense assumptions may overstate repayment capacity, especially outside Metro Manila. Lenders may also want to plan for funding costs staying high while the policy rate is 5.50% and core inflation is rising.

Implications

Facts

The Philippine Statistics Authority (PSA) reported on 5 November that headline inflation rose to 7.8% in October, up from 7.2% in September and 1.7% in October 2025. ¹ Average inflation for January to October was 5.6%, up from 5.4% for January–September. ² Core inflation, which excludes selected volatile food and energy items, rose to 5.4%. ³

Prices rose faster in housing, water, electricity, gas and other fuels, and in transport. Transport inflation rose to 20.1%, up from 14.6% in September, ⁴ and housing and utilities to 9.3%, up from 8.4% in September. ⁵ Food and non-alcoholic beverages inflation eased to 6.1%, down from 6.7% in September. ⁶

Inflation in the National Capital Region was 5.9%, up from 5.3% in September, ⁷ against 8.2% in areas outside it, up from 7.6% in September. ⁸ On 30 October the BSP had forecast October inflation of 7.1% to 8.1%. ⁹ The BSP raised its policy rate to 5.50% on 22 October.

Analysis

Time series: October's 7.8% is the highest of the eight months shown (chart), up from 4.1% in March and above the 7.2% of April and September. It is above the 7.6% recorded in March 2023, during the last inflation episode. The rise is now broader than energy alone: core inflation reached 5.4%, up from September, which suggests second-round effects from fuel and fares into other prices.

The year-to-date average of 5.6% is below the BSP's October full-year forecast of 6.1%, consistent with the central bank expecting elevated readings for the rest of the year. The policy rate of 5.50% remains below headline inflation.

Cross-country: Philippine inflation is far above its maritime neighbours. Indonesia's October inflation was 3.23% and Malaysia's September inflation 1.8%. The gap is widest for households outside Metro Manila, where inflation of 8.2% compares with 5.9% in the capital region.

Counterpoints and uncertainties

Transport inflation reflects fuel prices and fare adjustments that can reverse quickly if oil prices or the peso move, which would pull headline inflation down. Food inflation eased in October, and the PSA release gives no sign yet of how December holiday demand will affect prices. The BSP's next move will depend on core inflation and the peso, not on one month's headline reading.