Market & Mainstreet
BSP Warns Inflation Could Hit 7.4% as the PSEi Sinks to a 10 Month Low
The Daily Scan – October 01, 2026 (Thu)
The BSP says September inflation likely landed between 6.4% and 7.4%, up from 6.1% in August. Food, fuel and the weak peso are the drivers. The official number comes out on October 6.
Stocks took it badly. The PSEi fell for a third straight day to 5,679.48, its lowest close in over 10 months, and the peso closed at P62.64.
There is some good news. August exports hit a record, and economists expect a small Christmas lift to Q4 growth. But the export boom rests mostly on electronics, and rising prices could eat into holiday spending.
| USD to PHP | BSP Sept. inflation view | PSEi |
| P62.64 | 6.4% to 7.4% | 5,679.48, down 1.03% |
SECTION 1 · Philippines
● BSP sees September inflation at 6.4% to 7.4%, up from 6.1%
WHAT HAPPENED
SunStar reports that the BSP expects September inflation to speed up to between 6.4% and 7.4%. It points to weather-hit prices of vegetables, fish, rice and fruit, plus higher fuel prices and a weaker peso. Lower meat prices and electricity rates could offset part of it. BusinessWorld adds that the top of the range would be the fastest in three and a half years, and even the low end would be the fastest in four months.
UNCERTAIN
This is a forecast range, not the result. The Philippine Statistics Authority releases the actual September figure on October 6, per its release calendar.
WHY IT MATTERS
Food and fuel hit your costs and your customers’ wallets at the same time.
RISK
Costs rise while customers cut back on extras.
OPPORTUNITY
Firms that update prices early and show clear value can protect margins.
NEXT MOVE
Go through your cost sheet before October 6. Mark which items need a price update and which can wait.
● PSEi falls for a third day to its weakest close in over 10 months
WHAT HAPPENED
bne IntelliNews, citing The Manila Times, reports that the PSEi lost 58.92 points, or 1.03%, to 5,679.48 on Wednesday. RCBC economist Michael Ricafort said it last traded at that level on November 14, 2025. The peso closed at P62.64 per dollar, weaker for a third session. Analysts blamed growth worries, rising US yields and the BSP’s inflation warning. Foreign investors sold about P2.85 billion net. A planned P30 billion retail treasury bond offering and an October Mynt IPO were also cited as pulls on peso liquidity.
UNCERTAIN
Analysts give different reasons for whether the slide continues today, and none points to a single cause.
WHY IT MATTERS
Weak markets make fundraising harder, and a weak peso raises import costs.
RISK
Investors get choosier and imported inputs cost more.
OPPORTUNITY
Long-term investors may see lower prices, though that is not advice.
NEXT MOVE
If you plan to raise money from investors this quarter, build your pitch around cash flow, not growth stories.
● Record exports shrink the trade gap, but economists urge caution
WHAT HAPPENED
BusinessMirror reports that the August trade deficit narrowed 3.5% to $3.85 billion, the smallest since May 2025. The Inquirer reports that exports hit a record $9.11 billion, up 27.8% from a year earlier and the highest since 1991, with electronics doing the heavy lifting. Chinabank Research called it a concentrated electronics boom, not a broad gain in competitiveness. Pantheon Macroeconomics told BusinessMirror that part of the improvement came from imports falling back after a strong July.
UNCERTAIN
Whether the gap keeps shrinking. An economist in the BusinessMirror report said imports are growing faster than the government’s 5% assumption, so the deficit could widen again.
WHY IT MATTERS
A record headline does not mean every exporter is doing well. Most small firms do not sell chips.
RISK
A dip in global chip demand would hit the trade numbers fast.
OPPORTUNITY
Service and supply firms around electronics makers may see steady orders.
NEXT MOVE
If you serve exporters, ask your top two clients how their Q4 orders look.
● Economists see a small Q4 lift from remittances and holiday spending
WHAT HAPPENED
The Manila Bulletin reports that economists at the University of Asia and the Pacific expect a modest Q4 lift from steady OFW remittances, better business and consumer confidence, and holiday spending. They warn that wage adjustments and a harsh El Niño could speed up inflation from September and dampen spending. They expect manufacturing to keep growing through the drier season, helped by repeat orders, product launches, a return to growth in export orders and Christmas production. BusinessWorld notes that second quarter growth was 2.3%, a post-pandemic low.
UNCERTAIN
This is one group’s forecast. Third-quarter GDP is not out yet.
WHY IT MATTERS
Q4 is peak season for many small sellers, so the balance between holiday demand and price pressure shapes your year-end.
RISK
Shoppers trade down or buy less.
OPPORTUNITY
Sellers with clear Christmas bundles and early stock can capture a modest lift.
NEXT MOVE
Order Christmas stock now and add a cost buffer to your holiday prices.
SECTION 2 · Worth Knowing
● China’s factories return to growth, just before a week-long holiday
WHAT HAPPENED
investingLive reports that China’s official manufacturing PMI rose to 50.1 in September from 49.8, ending two months of contraction. The non-manufacturing reading rose to 50.2 from 49.0. A private survey also improved, with input costs driven by metals and oil. A companion investingLive note says mainland markets are closed from October 1 to 7 for National Day.
UNCERTAIN
The report says weak domestic demand still leaves Beijing under pressure to add support. Holiday effects on factory and shipping schedules are not spelled out.
WHY IT MATTERS
China is the Philippines’ top import source, at $25.36 billion from January to August, per BusinessMirror.
RISK
Higher Chinese input costs can show up in what we pay for imported goods.
OPPORTUNITY
Steadier Chinese output helps stock availability.
NEXT MOVE
If you import from China, place orders early and expect slower replies this week.
● Crude holds near $98 as Middle East flows recover faster than fuels
WHAT HAPPENED
Bloomberg reports that WTI traded near $90 after rising 1.2% on Wednesday, and the most active Brent contract settled around $98. Analysts and traders said Middle East crude flows are closing in on pre-war levels, but fuel supplies have not recovered to the same extent.
UNCERTAIN
This is below the $105 Brent we cited yesterday. Our read: the gap likely reflects the shift from the November to the December contract, since one broker note put the spread between them at about $7.58 on Tuesday. The sources do not confirm this.
WHY IT MATTERS
Our read: fuels such as diesel recovering slower than crude means pump prices here may not fall as fast as crude does.
RISK
Diesel stays costly even if crude eases.
OPPORTUNITY
None clear for most SMEs.
NEXT MOVE
Do not assume last week’s diesel cut repeats. Keep fuel flat in your October budget.
● UAE pump prices jump up to 16.6% from October 1
WHAT HAPPENED
Gulf News reports that the UAE Fuel Price Committee raised all fuel prices from October 1. Diesel goes to Dh4.80 a litre from Dh4.30, up 11.6%. E-Plus 91 petrol goes to Dh4.21 from Dh3.61, up 16.6%. The National adds that petrol rose for a third straight month and that fuel costs there are about 80% higher than before the Iran war began in February. The Filipino Times noted the rates affect Filipino residents who drive.
UNCERTAIN
None of the reports say whether remittances are changing.
WHY IT MATTERS
Our read: higher living costs in the Gulf squeeze what OFWs can send home. Remittances were one of the supports UA&P named for Q4.
RISK
Families that depend on remittances may spend less on extras.
OPPORTUNITY
None clear.
NEXT MOVE
If your sales lean on OFW families, watch BSP remittance data for signs of a slowdown.
SECTION 3 · THE OPPORTUNITY BEHIND THE NEWS
Price your holiday goods before the costs catch you
Two stories point the same way. Prices are rising, with the BSP’s forecast of up to 7.4%. And economists expect a small Q4 lift from holiday spending and steady remittances. Together they say demand is coming, but your costs will rise before it does.
Here is a simple example. A P100 item costs you P70 to make or buy, so you earn P30. If your cost rises 7% and you hold your price, the cost becomes P74.90 and your profit drops to P25.10. That is about 16% less profit on every sale.
So the opportunity is in timing. Buy Christmas stock early, set holiday prices with a small buffer, and offer bundles. Shoppers accept a bundle price more easily than a plain price hike.
SECTION 4 · FOUNDER’S LESSON
A big number can sit on a thin base
Exports hit an all-time high in August. Yet Chinabank Research warned that the gain comes mostly from one hot sector, electronics, and not from the country getting broadly better at selling abroad.
Your own business can look the same. A great month can come from one product, one big client or one viral post. It feels like growth, but it may be a single bet.
So check this week: what share of your sales comes from your top product, or your top customer? If it is more than half, treat the good month with care. Spend part of it on a second source of income, not only on more of the same.
SECTION 5 · ONE REAL SIGNAL
Inflation is speeding up again, and the market has noticed
The fact. The BSP expects September inflation between 6.4% and 7.4%, up from 6.1% in August, per SunStar. BusinessWorld notes the top end would be the fastest in three and a half years. The PSEi fell 1.03% on Wednesday to 5,679.48, and analysts cited the BSP’s warning among the reasons, per bne IntelliNews.
What we do not know. The actual figure. The PSA publishes it on October 6, and it can land anywhere in the range.
Our read. A reading in the upper half would give the BSP more reason to keep raising rates when it meets on October 22. That would mean costlier loans on top of costlier goods. It is an interpretation, not a forecast.
- The PSA September inflation release on October 6
- The peso against P62.70, where it has been testing
- Brent after the contract change, and any diesel price signals
- The BSP Monetary Board meeting on October 22
Summarized in our own words with links to every source. We don’t reproduce full articles or bypass paywalls. Interpretation is labeled as such and kept separate from reported fact.
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