Philippines inflation accelerates to 7.8 percent amid rising fuel costs

Inflation in the Philippines climbed to 7.8 percent in October, reaching its highest level in 44 months as escalating conflict in the Middle East drove up international energy costs, official figures showed on Thursday.

According to government data, the consumer price surge exceeded market expectations of 7.6 percent and marked the fastest pace of price growth since February 2023, when inflation stood at 8.6 percent. The latest surge lifts the average inflation rate for the year to 5.6 percent, significantly above the government's official target range of 2 to 4 percent.

Chief statistician Dennis Mapa explained during a press briefing that rising transportation expenses were the primary catalyst for the month-on-month increase, noting that transit costs jumped by 20 percent between September and October. As a nation heavily dependent on foreign oil supplies, the Philippines has faced severe cost pressures that have cascaded into power generation and the distribution of food across the archipelago.

Mapa warned of additional economic headwinds ahead, pointing to the ongoing impact of higher global energy prices alongside an El Nino dry spell that is beginning to strain domestic food production.

The inflationary pressures have coincided with a sharp depreciation of the Philippine currency, which recently hit an all-time low of 64 pesos against the US dollar. In response to the currency slide, President Ferdinand Marcos urged the public to stay calm, attributing the exchange rate weakness to rising crude import costs. While acknowledging that the administration cannot control global oil markets, Marcos maintained that the country's foreign currency reserves remain strong and that authorities possess sufficient mechanisms to stabilize the peso.

Central bank officials have acted aggressively to rein in consumer costs, lifting the benchmark interest rate by 50 basis points to 5.50 percent two weeks prior to the inflation report. Monetary authorities stated that robust policy measures were vital to counter widening price pressures and mitigate further risks to economic stability.

Persistent price increases have already weighed on broader economic performance. Philippine gross domestic product expanded by only 2.3 percent in the second quarter of the year, marking the slowest non-pandemic growth rate recorded since late 2009. The government is expected to release growth figures for the third quarter on Monday.