October Inflation Preview: Will inflation remain subdued?

Inflation surprisingly slowed to an over four-year low in September. Now, the question: Will headline inflation remain subdued for the rest of the year?

Metrobank Research sees annual headline inflation in October settling at 2.4%, bringing the year-to-date number to 3.3%, slightly lower than the 3.4% in September but still within the Bangko Sentral ng Pilipinas (BSP)’s 2-4% target.

We look at data from the Philippine Statistics Authority (PSA), Department of Agriculture (DA), Bloomberg database, and other publicly available resources to see what moved prices.

Rice prices sustain decline

With low tariffs and the harvest season, rice prices in Metro Manila appear to be on a downtrend.

Based on the Department of Agriculture (DA)’s price monitoring as of October 26, the average retail price of locally produced well-milled, regular-milled, and special rice dropped month-on-month.

Still, costs of the grain remain above their October 2023 levels. We expect annual rice inflation to be positive in October, though it should remain in the single digits due to a high base from a year ago.

Rice supply increased 24% year-on-year to 3.57 million tons as of October 14 amid the harvest season and tariff reduction incentivizing imports, according to the DA.

Farm officials see sufficient supply throughout the year despite bad weather, with the rice stock ending the year at 3.38 million tons, enough for consumption of 100 days.

Rice accounts for 8.9% of the Philippines’ Consumer Price Index (CPI).

Meat moves mixed month-on-month

Average retail price of beef rump and pork belly (liempo) increased in October from a month earlier, while pork shoulder (kasim) and whole chicken dropped. The cost of beef brisket remains unchanged month-on-month.

While month-on-month price movements were mixed, meats cost more than their October 2023 levels, pointing to positive annual meat inflation.

On the supply side, the government is moving to eliminate African Swine Fever (ASF) in the hog population to ensure adequate supply. Recently, the DA expanded its rollout of the ASF vaccine to commercial farms and swine herds, while the number of barangays reporting ASF cases have decreased.

Fresh meat accounts for roughly 4.8% of total CPI.

Fish costs rise on supply drop

Inflation of commodities in the fish basket continues a month-on-month and year-on-year upward trend.

Apart from inclement weather, decreasing production and catch in the West Philippine Sea (WPS) add to supply disruptions. Fisheries production declined by 0.5% and 6.2% in the first and second quarters from a year ago, respectively.

Fish catch in WPS in the first half was 101,039.5 metric tons, down 6.8% year-on-year. The Bureau of Fisheries and Aquatic Resource (BFAR) also reported on October 1 that they are currently exhausting all efforts to address declining fish catch in the area due to China’s fishing ban amid territorial disputes.

Fresh fish contributes 4.2% to total CPI.

Veggie prices roll down

Prices of several lowland vegetables, which saw an increase in the previous month due to bad weather, declined in October as supply stabilized.

Costs of cooking staples like locally produced onions and garlic remained stable month-on-month but lower year-on-year. The price of imported garlic slightly increased year-on-year despite its price remaining unchanged from the previous month.

Although vegetable prices are expected to climb moving forward due to the damage of Severe Tropical Storm Kristine, vegetables pose a downside risk to headline inflation in October based on year-on-year estimates.

Vegetables comprise 2.8% of CPI.

Fruit prices up

Prices of fruits also moved in mixed directions in October compared to September. Average retail prices of lakatan (a variety of banana), calamansi, and papaya rose from the month previous. Costs of the latundan banana variety and carabao mangoes fell.

Despite the mixed month-on-month movement, fruits generally cost more than their October 2023 price, indicating positive inflation contribution for October.

Fruit and nuts comprise 1.5% of CPI.

Oil prices down despite geopolitical risks

Two consecutive oil-price hikes in early October were partially offset by a rollback in the third week, bringing Metro Manila gasoline prices to PHP 58.15 and diesel to PHP 51.6, based on the NCR prevailing pump prices for the period October 22 to 28.

Despite threats of higher global oil costs due to mounting Middle East tensions, we still expect negative year-on-year inflation for gasoline and diesel as prices remain below October 2023 levels. This comes as the Organization of Petroleum Exporting Countries (OPEC) made this year’s third downward revision to the global oil demand growth for 2024 and 2025 due to China’s slowing economy.

Globally, oil prices from crude benchmarks such as Brent and WTI are estimated to increase month-on-month but decrease year-on- year.

Without second-round effects, gasoline and diesel comprise 1.8% and 0.6% of the country’s total CPI.

Electricity pose downside drag

Meralco charges dropped by 3.0% month-on-month in October due to lower costs from the Wholesale Electricity Spot Market (WESM) offsetting higher Malampaya charges. The drop in WESM charges is mainly due to the completion of its collection of deferred May 2024 costs in September and the improved supply situation in the Luzon grid.

Annually, Meralco charges fell 3.3% in October. Meralco, the largest electric distributor, supplies about 55% of the country’s electricity. Other major market players include Visayan Electric and Davao Light and Power Company.

Without second-round effects, electricity comprises 4.6% of total CPI.

Rent seen rising on a slower pace

Actual housing rentals were among the top contributors to headline inflation in September, despite slower annual increases. This is mainly due to the diminished demand and increased vacancies following the total ban of Philippine Offshore Gaming Operators.

Housing rentals comprise 12.8% of total CPI.

Minimal impact from wage hikes

The national wage board approved pay increases in four of the country’s 17 regions effective October 2024. The rest also saw respective minimum wage hikes in the last 12 months.

While wages do not directly contribute to headline inflation through an equivalent weight in the CPI, pay hikes pose upside price risks by stoking businesses’ costs.

Regional wage boards, under the national agency, also consider safeguards against inflationary effects of pay increases prior to their approval, making risks manageable.

Metrobank Research’s Take (MRT) 



Should price risks – from oil and other commodities amid geopolitical tensions and extreme weather disturbances – not materialize, Metrobank Research maintains that full year headline inflation should remain within the BSP’s target.

MARIA KAILA BALITE is a Research Officer of the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. She holds a Master’s degree in Applied Economics and also majored in Financial Economics for her Bachelor’s degree, both from De La Salle University Manila. Outside of work, her interests include thriller movies, K-dramas, and dogs. 


EZRA VIDAR is a Financial Markets Sector Management Trainee at Metrobank. She holds a Bachelor’s Degree in BS Business Economics from the University of the Philippines. Her thesis “Measuring Fiscal Policy Sustainability in Developing Asia: What does the Markov Switching Augmented Dickey-Fuller Test tell us?” won the A.Y. 2022-2023 Gerardo P. Sicat Award for best undergraduate paper which she cowrote with her thesis partner. In her free time, she likes listening to Twice and Taylor Swift.