Headline inflation accelerated to 1.8 percent in December 2025, its fastest pace since March last year, as higher food prices and quicker increases in clothing and footwear pushed overall prices up, government data showed. The latest figure marked a rebound from November’s slower pace but remained well below December 2024’s 2.9 percent, highlighting easing price pressures over the year.
For full-year 2025, the Philippines’ average inflation settled at 1.7 percent, significantly lower than the 3.2 percent average in 2024 and below the Bangko Sentral ng Pilipinas’ (BSP) 2.0 to 4.0 percent target range. BSP Governor Eli Remolona said the December uptick does little to change the broader inflation picture.
“Even with the increase in December, the numbers are still reasonably low,” Remolona said, noting that inflation remains comfortably anchored. “We’re very close to where we want to be in terms of policy rate. There’s a chance we may cut some more or not move at all,” he added, stressing that a rate hike is “unthinkable at this point.”
Higher food prices also ended a six-month deflation streak for the bottom 30 percent income households, whose inflation rose to 1.1 percent in December, raising concerns about near-term cost pressures for vulnerable consumers.
Core inflation—which strips out volatile food and energy items—held steady at 2.4 percent in December 2025, lower than 2.8 percent a year earlier. The annual average core inflation for 2025 also eased to 2.4 percent, from 3.0 percent in 2024, reinforcing signs of cooling underlying price pressures.
The December inflation uptick was largely driven by food and non-alcoholic beverages, which rose 1.4 percent year-on-year, up sharply from 0.1 percent in November, and by clothing and footwear, which climbed 2.2 percent. Food inflation returned to positive territory at 1.2 percent, reversing a 0.3 percent decline in the previous month, as rice prices posted a slower annual drop and vegetable inflation surged to 11.6 percent.
Still, price growth softened in housing and utilities, transport, and alcohol and tobacco—helping keep overall inflation contained.
Remolona said a 25-basis-point rate cut remains on the table in February, especially if growth weakens. The BSP projects 5.4 percent GDP growth this year, below government targets, with Remolona citing weakened investor confidence, partly due to controversy surrounding flood control spending.
