Prices rose by a modest 1.5% in August, indicating a mild increase in inflation.

The Bangko Sentral ng Pilipinas (BSP) has forecasted that inflation will trend higher but remain within the three percent ± 1.0 percentage point target range for 2026 and 2027. This prediction comes after the country's headline inflation rate increased to 1.5% in August 2025 from 0.9% in July.

The national average inflation from January to August 2025 was 1.7%, a decrease from the 3.3% recorded for the same period in 2024. The August inflation rate fell within the BSP's forecast range of 1.0 to 1.8%.

Food inflation, which contributed 0.2 percentage points to August's headline inflation, returned to positive territory at 0.6%, following a 0.5% decline in July. The rise in food inflation was largely due to higher prices of vegetables, tubers, plantains, cooking bananas, and pulses. Prices of meat (7.1 percent), dairy products and eggs (3.8 percent), and fruits and nuts (5.2 percent) posted slower increases compared to July.

Other food items that saw higher increases included oils and fats and ready-made food products. Fish and other seafood also accelerated to 9.5% in August. The BSP flagged possible risks from electricity rate adjustments and higher rice tariffs.

Core inflation, which excludes volatile food and energy items, rose to 2.7 percent in August. The Deutsche Bundesbank has expressed the expectation that inflation for the entire year 2025 will lie below the lower end of the target range of 2 to 4 percent. They indicate that inflation dropped to 2.1% in August 2025, with core inflation remaining at 2.4%, suggesting an outlook consistent with this expectation.

Weather risks may drive prices higher due to potential impact on agricultural production. The Philippine Atmospheric, Geophysical and Astronomical Services Administration has forecast seven to 15 tropical cyclones between September 2025 and February 2026. La Niña conditions, which may develop from September to December, could trigger flooding and crop damage in high-risk areas.

Socioeconomic Planning Secretary Arsenio M. Balisacan emphasized the importance of closely monitoring the country's weather outlook. The BSP expects inflation to average below the low end of its two to four percent target range for full-year 2025. However, the bank also flagged potential risks from electricity rate adjustments and higher rice tariffs.

Rice prices fell further by 17.0 percent year-on-year in August, faster than the 15.9 percent drop in the previous month. Despite the decrease, the BSP remains vigilant, considering the potential impact of weather conditions on agricultural production.

Prices rose by a modest 1.5% in August, indicating a mild increase in inflation.