Philippine Peso: Inflation and politics weigh on PHP against US Dollar – ING

ING economists Deepali Bhargava and Lynn Song warn that upside inflation risks are re-emerging for the Philippine Peso (PHP), driven by recovering Oil prices and expectations of a strong El Niño that could spark a food-price shock. Rising global rice and fertiliser prices add to pressures. They expect another 50bp of tightening in 2026, but highlight political uncertainty as a key downside risk that could delay reforms and dampen growth.

El Niño and policy risks pressure PHP

"Upside inflation risks are increasing again, driven by the recovery in oil prices and expectations of a strong El Niño later this year which could trigger a food inflation shock across import-dependent economies like the Philippines."

"Global rice prices are increasing as countries move to secure supplies, while fertiliser prices are likely to rebound from recent lows amid renewed US-Iran tensions and supply disruption."

"Persistent inflation pressures are likely to reinforce a hawkish policy stance, supporting our forecast for an additional 50bp of tightening in 2026."

"Political uncertainty remains a key downside risk, potentially delaying reforms, dampening growth, and sustaining downward pressure on the peso."