Philippine central bank warns of El Niño threat

By the Editorial Team · Friday, October 2, 2026

The Philippine central bank has warned that a very strong El Niño event could exacerbate inflationary pressures by disrupting agricultural output and increasing energy costs. This intensification of inflation, already at 6.1 percent, is expected to persist through the year, prompting the central bank to adjust monetary policy amid ongoing economic vulnerabilities.

The Philippine central bank has issued a warning about the potential impact of a strong El Niño weather event, which could worsen inflationary pressures in an economy already affected by high oil prices. The natural climate phenomenon, characterized by elevated Pacific Ocean temperatures, is expected to bring extreme weather conditions and disrupt agricultural output across the southern hemisphere.

Zeno Ronald Abenoja, deputy governor of the Bangko Sentral ng Pilipinas (BSP), described the event as a possible “Godzilla” El Niño, indicating an unusually intense episode. Speaking in a recent video interview, Abenoja noted that the peak impact has yet to materialize and predicted the effects would unfold gradually over the next four to five months. He emphasized that the situation represents a "slow burn" shock that policymakers must monitor closely.

The El Niño currently underway has been classified as “very strong” by official meteorological agencies and is anticipated to peak around November or December, lasting until at least February, according to the World Meteorological Organization. This phenomenon is expected to cause widespread consequences, including droughts, heatwaves, and in some areas, increased rainfall leading to flooding.

In the Philippines, inflation accelerated to 6.1 percent in August, one of the highest rates in Southeast Asia, and the BSP forecasts this elevated inflation will persist throughout the year. The country is heavily dependent on oil imports and food imports, making it particularly vulnerable to global price fluctuations that have been driven higher by a range of factors, including rising energy costs.

Abenoja said the central bank has factored the potential effects of El Niño into its monetary policy decisions. Since April, the BSP has increased interest rates by a total of 0.75 percentage points, bringing the benchmark rate to 5 percent, in an effort to contain inflation. He acknowledged the difficulties faced by policymakers, noting the ongoing influence of recent oil price hikes and weather disruptions on headline inflation, which is expected to remain elevated in the short term.

Beyond the Philippines, the El Niño pattern has affected other parts of Asia. Several densely populated capitals have experienced higher temperatures and delayed rainfall. India faces one of its driest monsoon seasons in 17 years. In Indonesia, the combination of El Niño and slash-and-burn agricultural practices has intensified forest fires, producing widespread toxic haze. Similar climate impacts have raised concerns about lower yields in key crops such as rice and palm oil throughout South and Southeast Asia.

These conditions underscore the broader economic challenges posed by the weather phenomenon to vulnerable countries dependent on agriculture and energy imports, complicating efforts to manage inflation and safeguard food supply stability in the region.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.