The Philippine Statistics Authority (PSA) reported that the country’s annual average inflation rate for 2025 stood at 1.7 percent, a significant decrease from the 3.2 percent average recorded in 2024. While the year-end figures reflect a stabilizing economy, the headline inflation rate for December 2025 saw a slight increase to 1.8 percent, up from 1.5 percent in November.
The uptick in December’s headline inflation was primarily driven by the Food and Non-Alcoholic Beverages sector, which saw a year-on-year increase of 1.4 percent, compared to just 0.1 percent in November. Additionally, the Clothing and Footwear index rose to 2.2 percent.
Despite these increases, several commodity groups saw a deceleration in price growth, including:
-
Transport: 0.3% (from 1.7% in November)
-
Housing, Water, Electricity, Gas, and Other Fuels: 2.5% (from 2.9%)
-
Alcoholic Beverages and Tobacco: 3.3% (from 3.6%)
The overall decline in the 2025 annual average inflation (1.7% vs. 3.2% in 2024) is attributed to a massive slowdown in food costs and service sectors.
-
Food and Non-Alcoholic Beverages: Averaged 1.2% in 2025, down from 4.4% in 2024.
-
Restaurants and Accommodation Services: Dropped to 2.4% from 4.8%.
-
Transport: Recorded a deflationary trend with an annual average drop of 0.4 percent, a reversal from the 0.9 percent increase in 2024.
Food inflation at the national level rose to 1.2 percent in December 2025. This was largely influenced by a “slower decline” in rice prices—meaning while rice prices are still lower than last year, the gap is narrowing—and a sharp spike in vegetable prices.
Top Contributors to December Food Inflation:
-
Fish and other seafood: 1.5 percentage points share.
-
Vegetables, tubers, and pulses: 1.1 percentage points share (surged to 11.6% inflation).
-
Meat: 0.6 percentage point share.
Core inflation, which strips out volatile food and energy items to measure underlying price pressures, remained steady at 2.4 percent in December 2025. The annual average core inflation for the year was also 2.4 percent, down from the 3.0 percent recorded in 2024, indicating a generally stable price environment for the Philippine economy moving into 2026.
