Philippine Inflation Eases Significantly in 2025 Despite December Uptick
Posted on 1/6/26
The Philippine economy concluded 2025 on a nuanced note regarding inflation, with the annual average rate for the entire year significantly moderating compared to 2024. While December 2025 saw a slight acceleration in the national headline inflation, this marginal rise was well within expectations and did not derail the overall trend of easing price pressures observed throughout the year. This broad deceleration underscores a more stable pricing environment, providing a favorable backdrop for economic planning and consumer spending.
The national headline inflation rate recorded a modest increase to 1.8 percent in December 2025, up from 1.5 percent in November. Despite this month-on-month uptick, the December figure remained notably lower than the 2.9 percent observed in the same month of 2024, indicating sustained moderation over the year. The primary impetus for this December acceleration stemmed from a faster annual increase in Food and Non-Alcoholic Beverages, which surged to 1.4 percent from a mere 0.1 percent the prior month. Complementing this, Clothing and Footwear also contributed to the upward momentum, rising to 2.2 percent from 1.8 percent.
Conversely, several key commodity groups experienced a welcome slowdown in their inflation rates during December. Alcoholic Beverages and Tobacco saw a decrease from 3.6 percent to 3.3 percent, while Housing, Water, Electricity, Gas, and Other Fuels decelerated to 2.5 percent from 2.9 percent. Transport costs eased significantly, dropping to 0.3 percent from 1.7 percent, and both Restaurants and Accommodation Services, along with Personal Care and Miscellaneous Goods, also showed more contained price movements. Despite these moderating factors, Food and Non-Alcoholic Beverages emerged as the top contributor to the December inflation, accounting for 31.0 percent of the share (0.6 percentage point), followed by Housing and Utilities (27.7% share) and Restaurants and Accommodation (12.9% share).
Looking at the broader picture, the annual average inflation rate for the full year of 2025 stood at a commendably low 1.7 percent. This represents a substantial deceleration from the 3.2 percent average recorded in 2024, marking a significant win for price stability. The overarching decline in 2025 was largely attributable to the sustained cooling of food prices, with Food and Non-Alcoholic Beverages averaging 1.2 percent in 2025, a stark contrast to the 4.4 percent average in 2024. Additionally, Restaurants and Accommodation services saw their average inflation ease to 2.4 percent from 4.8 percent, while the Transport index notably reversed course, registering a 0.4 percent annual drop after a 0.9 percent increase the previous year.
At the granular level, national food inflation registered a recovery, rising to 1.2 percent in December 2025 from a 0.3 percent decline in November. This resurgence was primarily fueled by a slower pace of decline in Rice prices (-12.3% vs. -15.4% in November) and a sharp acceleration in Vegetable prices, which surged to 11.6 percent from 4.0 percent. Corn also experienced a significant turnaround, moving from a 4.1 percent decline to a 7.3 percent increase. Meanwhile, core inflation, which filters out volatile food and energy items, remained stable at 2.4 percent in December 2025. The annual average core inflation for 2025 also reflected this moderation, settling at 2.4 percent, down from 3.0 percent in 2024, affirming underlying price stability.
Regional inflation trends presented a mixed but generally consistent picture with national movements. The National Capital Region (NCR) experienced a deceleration in its inflation rate, easing to 2.3 percent in December 2025 from 2.8 percent in November. This slowdown in the capital was primarily driven by lower costs in Housing, Water, Electricity, Gas, and Other Fuels. In contrast, Areas Outside NCR (AONCR) saw an acceleration to 1.7 percent in December from 1.2 percent in November, primarily due to a swing in Food and Non-Alcoholic Beverages from a decline to an increase. Region VII (Central Visayas) recorded the highest inflation at 3.8 percent, while the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) continued its unique trend of negative inflation at -1.0 percent. The annual average inflation for AONCR in 2025 was 1.5 percent.
The comprehensive inflation data for 2025, as presented by Undersecretary Claire Dennis S. Mapa, indicates a Philippine economy successfully managing price stability amidst various global and domestic factors. The significant reduction in the annual average inflation for 2025 compared to the previous year, coupled with a stable core inflation, provides a robust foundation. While the slight December uptick warrants continued monitoring, the underlying trend points to a controlled inflationary environment. This scenario typically supports sustained economic growth, stable purchasing power for consumers, and offers flexibility for policymakers in navigating future economic challenges.