MANILA – Headline inflation accelerated to 1.8% year-on-year in December 2025, up from 1.5% in November, according to the Philippine Statistics Authority (PSA) data released on January 6, 2026. The uptick—driven by higher food, utility, and transport costs amid holiday demand—ended the year on a slightly firmer note but kept the full-2025 average at a low ~1.9%, well below the Bangko Sentral ng Pilipinas (BSP) 2-4% target.
Key Drivers of the December Increase
- Food & Non-Alcoholic Beverages: Faster rises in rice, meat, and vegetables despite supply interventions.
- Housing, Utilities, Fuels: Higher electricity rates and LPG prices.
- Transport: Modest fuel adjustments contributed.
- Core Inflation (excluding volatile food/energy): Steady at 2.4% YoY.
The reading matched or slightly exceeded some forecasts (e.g., BSP’s 1.2-2% range upper end), reflecting muted holiday pressures compared to prior years.
2025 Full-Year Context
- Average Inflation: ~1.9%—one of the lowest in decades, aided by easing global commodities, strong peso phases, and government subsidies.
- Comparison: Down sharply from 2024’s higher levels, providing household relief.
This low-inflation environment supports BSP’s rate-cutting cycle (200 bps in 2025 to 4.5%) and room for further easing if growth lags in 2026.
Inflation Trend Snapshot (Recent Months):
| Month | Headline Rate | Core Rate | Notes |
|---|---|---|---|
| Nov 2025 | 1.5% | 2.4% | Three-month low |
| Dec 2025 | 1.8% | 2.4% | Holiday uptick; still subdued |
A stable close to 2025—positive for purchasing power heading into the new year.