BSP flags faster inflation in February

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March 1, 2026 | 12:00am

MANILA, Philippines — Inflation likely accelerated in February from January’s two percent print as higher food and utility costs began to filter through, with the Bangko Sentral ng Pilipinas (BSP) projecting headline inflation to settle within 2.3 to 3.1 percent.

In its month-ahead inflation forecast, the central bank said upside pressures for February could come from higher prices of rice and fish, elevated domestic petroleum prices and increased electricity charges in areas serviced by Manila Electric Co. (Meralco).

These factors, however, may be partly offset by lower prices of vegetables, fruits and meat, as well as the recent appreciation of the peso against the dollar.

If realized, February inflation would mark a further pickup from the two percent recorded in January, when consumer prices rose at the fastest pace in 11 months, but remained within the BSP’s two to four percent target band.

“The BSP will continue to monitor domestic and international developments to ensure that its policy settings remain consistent with the pursuit of price stability conducive with sustainable growth and employment,” the central bank said.

The February outlook suggests price pressures are normalizing after several months of subdued inflation, with an analyst pointing to both supply-side developments and base effects as key drivers.

Rizal Commercial Banking Corp. chief economist Michael Ricafort estimated February inflation at around 2.5 percent year-on-year, broadly consistent with the BSP’s forecast band.

Ricafort said local rice prices have risen after the government temporarily banned rice imports starting September 2025, a move aimed at supporting farmgate prices and protecting farmers’ incomes during the harvest season. Since rice makes up about nine percent of the consumer price index basket, any change in rice prices can significantly influence overall inflation.

He also warned that higher global crude oil prices and increases in industrial metals and other commodities, amid geopolitical risks in areas such as Iran and Venezuela, could push import costs higher in the coming months and contribute to a gradual pickup in inflation.

Despite the expected uptick, Ricafort said inflation could still average around three percent in the coming months, remaining well within the BSP’s target range, due to base effects.

For full-year 2026, Ricafort expects inflation to average about 3.7 percent, still manageable but higher than last year’s 1.7 percent average.

Monetary authorities are expected to closely monitor the inflation trajectory as they assess the need for further easing.

Ricafort said softer economic growth, benign inflation conditions and a relatively stable peso could justify a possible 25-basis-point rate cut in the coming months, especially if matched by future policy easing from the US Federal Reserve.

Such a move, he said, could help support domestic demand alongside expansionary fiscal spending, particularly infrastructure outlays, as the government seeks to sustain economic momentum.

The BSP lowered its benchmark rate to 4.25 percent at its February meeting, extending total rate cuts to 225 basis points since August 2024.