Iloilo City inflation surges, bucking W. Visayas trend

By Francis Allan L. Angelo

Residents in Iloilo City faced surging prices for food and housing in July 2025, making the city a stark exception to an otherwise stable inflation environment across Western Visayas, according to a new analysis.

The study, conducted by Iloilo-based think tank Institute of Contemporary Economics (ICE) using data from the Philippine Statistics Authority (PSA) and other publicly available sources, points to the city’s recent real property tax (RPT) hike as the primary factor driving the inflation.

According to the ICE, even a 40% reprieve on the tax increase passed by the City Council has not been enough to contain the effects rippling through the local economy.

Meanwhile, the rest of the region, including Iloilo province, is experiencing benign inflation, with some areas now falling below the 2.0% long-term healthy threshold.

Aklan, Antique, and Capiz posted slower inflation rates of 1.7%, 0.7%, and 1.5% respectively in July.

Guimaras experienced deflation at -0.5% while Iloilo province remained steady at 1.8%.

The national inflation rate was at 0.9% in July 2025.

FOOD, HOUSING COSTS CLIMB

The ICE analysis identified food and non-alcoholic beverages as the main drivers of the inflation spike in the city.

Fish prices saw a significant year-on-year increase of 21.0%, while coffee prices jumped by 20.0% and eggs by 5.7%.

Unlike other areas in the region, rice prices in the city did not experience a significant drop, further straining household budgets.

The institute also found that housing and utility costs climbed, with Iloilo City and province being the only areas in the region to record increases in rental costs.

ICE attributed this directly to landlords passing on the RPT hike to tenants.

ELECTRICITY ANOMALY, TRANSPORT RELIEF

The analysis also highlighted a year-on-year rise in electricity prices, which it described as an “anomaly” not reflective of current market conditions.

The institute explained this was due to “artificially low rates” in July 2024, which resulted from deferred Wholesale Electricity Spot Market (WESM) charges mandated by the Energy Regulatory Commission (ERC).

In fact, electricity prices in Iloilo City actually decreased by 5.5% in July compared to the previous month of June 2025.

In contrast, transport costs were down across Western Visayas, providing some financial relief to consumers due to lower global oil prices.

TAX HIKE IS KEY FACTOR

The Institute of Contemporary Economics concluded by singling out the city’s tax policy as the root cause of its unique inflationary environment.

“The only variable present in Iloilo City separating it from the region is the unusually severe increase in real property taxes,” the ICE analysis stated.

This suggests that the cost of the tax hike is now cascading from housing to other essential goods and services.

The ripple across the city’s economy first started with higher rent, then through increased business costs, and finally, through inflated prices for food, transportation, and other essentials.

For landlords, higher property taxes often translate to higher rents – both residential and commercial. Tenants, already stretched by rising costs, feel the squeeze directly. But businesses renting space in the city also bear the brunt, eventually passing on those costs to consumers in the form of pricier goods and services.

Even homeowners aren’t spared. With higher annual taxes to pay, many families are left with less disposable income, weakening their purchasing power. Yet essential goods – such as rice, fuel, and medicine – remain non-negotiable expenses, and vendors, sensing increased costs citywide, may raise prices to stay afloat. The result is a feedback loop that pushes prices upward, even when the broader region sees less volatility.

While the local government introduced a 40% tax reprieve in response to mounting concerns, ICE concluded that the measure “does not appear to be enough to keep a lid on inflationary pressures.”

The relief, it suggested, came too late – or too little – to reverse the inflationary trend already in motion.

‘PUNISHMENT’

“My rent is going up by PHP500 next month,” said Bea C, 23, a call center agent renting a room in the city. “That’s my budget for groceries for a whole week. It feels like punishment for me.”

For students like Jean Paul, 19, the rent hike is a direct blow.

“My parents’ budget for my allowance is tight. The sudden increase in my boarding house rent means I have to cut back on meals and other things like coffee. I will just have to adjust.”

Maria Flores, 56, who runs a small carinderia or eatery in the city, feels trapped. “The rent for my small space went up by PHP1,000. The fish and vegetables I buy from the market are also more expensive. I had to increase the price of a meal by PHP10, but I worry my regular customers can’t afford it anymore. How can we survive?”

“I have no choice but to pass the cost on to my customers,” said a barbershop owner who asked not to be named. “My commercial rent increased. My electricity bill is high. If I don’t adjust my price for a haircut, I’ll be operating at a loss.”

An apartment owner in Mandurriao, who manages a property inherited from her parents, explained their position. “People think we’re getting rich, but my real property tax bill almost doubled this year. This rental income is my only pension. If I don’t adjust the rent, I would have to pay for the massive tax increase out of my own pocket.”