The Philippines’ annual inflation rate rose to 7.8% in October 2026 from 7.2% in September, reaching its highest level since February 2023 and exceeding analysts’ 7.6% forecast. The increase was driven primarily by a 20% rise in transport costs as the Middle East conflict pushed up oil prices and the peso weakened to 64 per dollar. Transport inflation accelerated to 20.1% from 14.6%, while inflation for housing, water, electricity, gas and other fuels increased to 9.3% from 8.4%. Price growth also quickened for restaurants and accommodation services, health, and furnishings and household equipment, although food and non-alcoholic beverage inflation eased to 6.1% from 6.7%. Consumer prices rose 0.7% month on month, slower than September’s 1% increase. Inflation for 2026 reached 5.6%, above the government’s 2%-4% target. The central bank had raised its key lending rate by 50 basis points to 5.5% two weeks earlier, citing broadening price pressures and further upside risks. Chief Philippine statistician Dennis Mapa also cited the emerging El Niño dry spell and higher energy commodity prices as risks. President Ferdinand Marcos said the government had tools to defend the peso and urged Filipinos not to panic. Economic growth slowed to 2.3% in the three months through June, excluding pandemic years the weakest since the fourth quarter of 2009, with third-quarter GDP data due on Nov. 9.