THE Bangko Sentral ng Pilipinas (BSP) expects inflation in February 2026 to settle within the 2.3 percent to 3.1 percent range, citing mixed price pressures across key commodity groups.
In an advisory, the central bank said upside risks could come from higher prices of rice and fish, elevated domestic petroleum prices, and increased electricity charges in areas serviced by Manila Electric Company. These, however, may be partly offset by lower prices of vegetables, fruits and meat, as well as the appreciation of the peso.
The BSP said it will continue to monitor domestic and international developments to ensure that its policy settings remain aligned with its mandate of maintaining price stability conducive to sustainable growth and employment.
For its part, Metropolitan Bank & Trust Company (Metrobank) forecasts headline inflation to settle at 2.4 percent in February, well within the BSP’s 3±1 percent target band.
The bank noted that while the BSP cut policy rates anew this month, the impact of monetary easing on price levels will take time to materialize. Low base effects, however, may begin to surface and fan inflation in the coming months, potentially steepening the bond yield curve.
Imports, rice dynamics
Metrobank said rice deflation slowed year-on-year to single digits in January, as farmgate prices increased month-on-month following a four-month import ban imposed by the Department of Agriculture (DA).
The temporary ban was meant to shield farmers from sharp price declines. However, the delayed arrival of January imports after the ban was lifted helped sustain rice price increases, which, based on available data, persisted until early February.
Despite this, annual rice deflation likely continued in February, exerting downward pressure on headline inflation.
Onions are also expected to contribute to easing price pressures as harvests peak in March. While farmer groups have cited imports flooding the local market and dragging prices, the DA has maintained that import volumes are not excessive.
Base effects, power costs
Metrobank said vegetables, fruits and seafood may register faster year-on-year increases in February, largely due to low base effects as price growth for these items began slowing in the same period last year.
In contrast, preliminary data from the Philippine Statistics Authority suggests pork prices may have declined year-on-year this month, amid a sharp drop in African Swine Fever cases that allowed hog production to recover.
Electricity rates are also expected to push inflation higher. While power rates across much of the country rose year-on-year, increases were more pronounced in areas served by Davao Light and Power Company and Visayan Electric Company.
Fuel prices, meanwhile, were higher month-on-month but remained lower year-on-year, reflecting swings in global oil prices.
Rents, key drivers
Rental rates for housing, among the top contributors to inflation in January, are also seen rising further as annual lease contracts are commonly renewed and repriced at the start of the year. A faster year-on-year increase in rental prices is expected in February and March as more contracts are renewed.
Overall, the bank said food, energy and rental costs will continue to drive headline inflation this month, with rice and onion prices providing only partial relief.
Still, the bank expects inflation to remain within the BSP’s target range in February, supported by base effects and easing supply pressures in select food items. / KOC