Philippine Inflation Falls to 1.3%, Easing Burden on Poor

Headline inflation in the Philippines cooled to 1.3% in May 2025, its lowest level since November 2019, providing significant relief to low-income households, according to the Department of Finance.

Finance Secretary Ralph G. Recto described the drop as a “very encouraging development” and attributed the trend to targeted government measures aimed at stabilizing food prices and streamlining supply chains.

“This is a clear sign that the Marcos, Jr. administration’s efforts to stabilize food prices and improve supply chains are paying off, especially for our most vulnerable sectors,” Recto said in a statement.

He emphasized the administration’s commitment to maintaining the downward trend, noting a recent uptick in pork prices as an area of concern.

“Hindi kami kailanman magiging kampante. Patuloy ang aming pagbabantay sa mga maaaring pagmulan ng pagtaas ng bilihin—lalo na ngayon na may nakikita tayong pagtaas sa presyo ng karneng baboy,” Recto said. “We are ensuring that this will be reversed through adequate supply of pork and continued rollout of the African swine fever vaccine.”

The May inflation figure brings the year-to-date average to 1.9%, well below the government’s 2% to 4% target range.

For the bottom 30% of income households, inflation was even lower at 1.0%, with no recorded price increases in May.

Key drivers of the continued disinflation include slower increases in housing, water, electricity, gas, and other fuels, which rose by only 2.3% in May from 2.9% in April.

Electricity prices eased due to lower spot market rates, while water concessionaires had adjusted tariffs in April, contributing to the cooling trend.

Transport costs also declined further, posting a -2.4% inflation rate compared to -2.1% the previous month, amid cheaper gasoline and diesel.

Food inflation remained subdued at 0.7% in May, down sharply from 6.1% a year earlier, largely driven by improved rice prices.

Rice inflation recorded a 12.8% year-on-year contraction, marking the fifth consecutive month of decline and a sharp turnaround from a 23% increase in May 2024.

Government measures, such as Executive Order No. 62 and the lowering of the maximum suggested retail price for imported rice to PHP 45/kg in March, were cited as key contributors to this reversal.

The Marcos, Jr. administration has rolled out new initiatives like the “Benteng Bigas, Meron Na!” (BBM Na!) program, offering PHP 20/kg rice to 4Ps beneficiaries, senior citizens, PWDs, and solo parents through KADIWA outlets and selected retailers.

Eligible households will also receive digital vouchers to subsidize their rice purchases and help address undernutrition.

Short-term measures to stabilize pork supply include containment of African swine fever and an upcoming nationwide vaccination campaign.

The Department of Agriculture is pursuing long-term solutions such as livestock recovery, biosecurity programs, and swine repopulation.

To support fishers in the West Philippine Sea, the KADIWA ng Bagong Bayaning Mangingisda (KBBM) Program allows the government to buy their catch while offering subsidies for fuel and rice.

Fish import permits have also been extended through June to augment domestic supply.

To align wages with economic conditions, President Marcos, Jr. instructed the Regional Tripartite Wages and Productivity Boards to evaluate possible minimum wage hikes across regions.

Despite the optimistic inflation figures, the Bangko Sentral ng Pilipinas (BSP) remains vigilant, noting that the May result fell within its 0.9% to 1.7% forecast range.

The BSP assessed inflation risks for 2025 to 2027 as “broadly balanced,” citing upside pressures from possible increases in transport, meat, and utility costs.

Downside factors include the effects of lower rice tariffs and weaker global demand, which could dampen both commodity prices and domestic activity.

“The more manageable inflation outlook and the downside risks to domestic economic activity allow for a shift toward a more accommodative monetary policy stance,” the BSP said in a statement.

The central bank said it would continue to adopt a measured, data-driven approach in its upcoming June monetary policy meeting.