Lower food prices, particularly rice, are expected to have offset higher fuel and electricity costs in July, keeping headline inflation steady, analysts said.
A median forecast of 6.4% for July inflation was yielded by a BusinessWorld poll of 21 analysts and economists, the same as in June but sharply higher than the 0.9% recorded a year earlier.
This would make July the fifth month in a row that the headline inflation breached the central bank's 4% ceiling.
The median estimate falls within the Bangko Sentral ng Pilipinas' (BSP) 5.6%-6.6% forecast for the month.
The Philippine Statistics Authority (PSA) will release the July inflation data on Wednesday, August 5.
Analysts are split on the inflation reading for July, with some anticipating a softer headline figure and others expecting a faster one.
Philippine National Bank Chief Economist Alvin Joseph A. Arogo said headline inflation likely remained unchanged in July amid offsetting price pressures.
"The higher cost of petroleum and electricity could have been offset by lower prices of major food commodities such as rice and vegetables," he said.
Deepali Bhargava, regional head of research for Asia-Pacific at ING Bank, noted that lower rice prices likely kept the headline inflation steady, but pressures remained from higher retail pump prices and sticky services inflation.
"Services inflation is expected to remain sticky, reflecting persistent underlying price pressures in the sector," she said.
However, most analysts surveyed were split on the inflation reading for July, with 10 anticipating a softer headline figure and nine expecting a faster one.
For Oxford Economics Assistant Economist Jun Hao Ng, headline inflation may have picked up to 6.6%, largely driven by costlier fuel, especially diesel.
"The main driver was likely a renewed increase in fuel prices, following higher global oil prices amid renewed tensions between the US and Iran," he said.
Meanwhile, University of Asia and the Pacific Economist Marco Antonio C. Agonia sees July inflation heating up to 6.9% due to the continued transmission of second-order price effects and base effects from the significantly slower headline print in July 2025.
"We think inflation moved faster in July, mostly reflecting second-round inflationary effects, the immediate rebound in oil prices with the resurgence of tensions in the Middle East, and some base effects from last year's below-target inflation," he said.
Local fuel retailers raised pump prices by as much as P11.70 per liter for gasoline, P26.19 per liter for diesel, and P23.89 per liter for kerosene during the month.
Manila Electric Co. also hiked electricity rates by 34.28 centavos per kilowatt-hour (kWh) to P14.8261 per kWh in July from P14.4833 per kWh in June.
However, softer rice prices may have eased inflation slightly last month, according to Marites M. Tiongco, a professor at the De La Salle University Carlos L. Tiu School of Economics.
"Food inflation showed mixed movements," she said. "Rice prices continued to stabilize, helping moderate overall food inflation. However, vegetables, processed food, and other commodities remained vulnerable to weather-related disruptions and higher transport costs."
Rice prices continued to decline month on month for a third consecutive month even amid El Niño concerns, with regular milled rice dipping by 0.74% to P49.30 a kilo and well-milled rice falling by 0.82% at P55.69 a kilo.
Core inflation likely continued to quicken for the seventh consecutive month in July, despite a potentially slower headline print, which analysts said would warrant at least one more rate hike from the BSP.
For Oxford Economics' Mr. Ng, high energy prices likely continued to feed into other commodities.
"We also expect core inflation to quicken for a seventh straight month," he said. "Elevated energy costs have likely continued to generate second-round effects, feeding into a broader range of consumer prices."
The recent minimum wage increase may have added some pressure to underlying inflation, according to Ms. Tiongco.
However, Moody's Analytics Economist Sarah Tan and Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco are pricing in a pause this month, citing cooler inflation and still weak growth.
The BSP wants inflation to stay near its 3% target, but its latest projection shows the headline print may average 6.4% this year.
Analysts see underlying pressures prompting the central bank to deliver at least one more rate hike this year, with a third straight increase at its upcoming August 27 meeting.
For Maybank Investment Bank Economist Azril Rosli, the door for another 25-basis-point (bp) hike remains open for the BSP even as he expects a softer headline clip last month.
"Upside risks from the recent minimum wage hike, peso depreciation, higher US tariffs and geopolitical uncertainties continue to cloud the inflation outlook," he said.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion also noted that their base case points to another round of tightening this month.
BSP Governor Eli M. Remolona, Jr. said last week that there is a slim chance for a 50-bp hike, citing emerging inflationary pressures from the renewed conflict in the Middle East and weak peso.
He added that he still expects the economy to rebound in the second half of the year, giving them room to tighten further.
The BSP raised its key policy rate for a second straight meeting by 25 bps to 4.75% in June, bringing its total hikes to 50 bps.
