Inflation pressures most widespread in Philippines – Nomura

MANILA, Philippines — The Philippines is facing the most widespread inflation pressures among Asian economies tracked by Japanese investment bank Nomura, strengthening the case for further interest rate hikes by the Bangko Sentral ng Pilipinas (BSP).

In a report, Nomura said the Philippines recorded an inflation generalization index of 108, the highest among seven Asian economies surveyed.

The index measures how broadly price increases are spreading across goods and services. A reading above 100 indicates greater inflation pressures across the economy.

Nomura’s data showed that 72.8 percent of the Philippine consumer price basket, weighted according to household spending, registered inflation above the midpoint of the BSP’s target range in September, up from 70.8 percent in August.

This was significantly higher than South Korea’s 49.7 percent, Singapore’s 45.5 percent and Indonesia’s 43.7 percent, based on the latest available figures.

“The sharp rise in the generalization index readings is consistent with our view that pass-through effects will be quick and significant,” Nomura economist Euben Paracuelles said.

Headline inflation accelerated to 7.2 percent in September from 6.1 percent in August, driven largely by higher food and fuel prices. Core inflation, which excludes selected volatile food and energy items, climbed to 4.7 percent.

Paracuelles noted that price increases were also becoming evident in restaurants, accommodation and personal care services, suggesting that higher energy costs were spreading to other sectors.

Against this backdrop, Nomura expects the BSP to raise its benchmark interest rate by another 25 basis points to 5.25 percent this month, with risks of additional tightening afterward.

The investment bank maintained its average inflation forecast of 5.8 percent for 2026 and 3.4 percent for 2027, with risks tilted upward due to a potentially strong El Niño.

Across Asia, Nomura’s inflation generalization index rose to 102 in August from 97.1 in March, although this remained below the 115 recorded during the 2022 inflation surge.

Nomura said regional inflation expectations and wage growth remained relatively contained, limiting the risk of runaway inflation despite persistent supply shocks.