Philippine inflation accelerates to 2% in January

By Katherine K. Chan, Reporter

PHILIPPINE INFLATION accelerated to its fastest pace in nearly a year in January amid a faster rise in rents and electricity rates, the Philippine Statistics Authority (PSA) reported. 

Headline inflation picked up to 2% from 1.8% in December but slowed from 2.9% in the same month last year.   

This was the fastest pace seen in 11 months or since 2.1% in February 2025.

It also marked the first time in almost a year that the consumer price index (CPI) hit the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% target. 

The January clip was likewise above the 1.8% median forecast in a BusinessWorld poll of 18 economists but was within the central bank’s 1.4%-2.2% estimate for the month. 

“The main reason for the higher inflation rate in January 2026 compared with December 2025 is the faster price increase in housing, water, electricity, gas, and other fuels, which recorded a 3.3% inflation rate,” National Statistician Claire Dennis S. Mapa said at a news briefing on Thursday. 

Inflation for housing, water, electricity, gas and other fuels quickened to 3.3%, the fastest since 3.8% in August 2024.

According to the PSA, this commodity group had a 45.9% share in the overall inflation uptick in January.

Broken down, inflation for electricity rose to 6.5% year on year in January from the revised 4% in December, while rental prices picked up by 2.9% during the month from 2.4% in December.

This comes even after Manila Electric. Co. trimmed electricity rates by 16.37 centavos per kilowatt-hour (kWh) to P12.9508 per kWh last month from P13.1145 per kWh in December, which meant households consuming an average of 200 kWh paid P33 less in their monthly electricity bill.

In January 2025, Meralco charged P11.7428 per kWh.

The Department of Economy, Planning, and Development (DEPDev) said the government is enforcing programs to manage price pressures emerging from the energy sector. It includes improving the Department of Energy’s Net Metering Program by enforcing time-bound local permitting, simplifying utility documentary requirements and expanding consumer incentives.   

“The program allows consumers to install eligible renewable energy systems and export surplus electricity to the grid, helping lower electricity costs and support the energy transition,” the DEPDev said in a statement.

Mr. Mapa also noted that liquefied petroleum gas (LPG) added price pressures, as inflation settled at -2.8% in January from -5.1% in December.

In January, Petron Corp. hiked LPG prices by P2.18 per kilogram (kg), while Solane imposed a P2.18-per-kg increase.

This means that the price of a household-standard 11-kg LPG tank ranged from P820 to P1,120 last month, based on data from the Department of Energy.   

Meanwhile, Mr. Mapa noted that lessors often begin implementing rental rate adjustments in the first month of the year, which likely propped up rental inflation in January.

“Our reading is that January marks the start of the yearly rental adjustments,” he said in mixed Filipino and English, adding there could be further increases in February and March.

FASTER RESTAURANT INFLATION
Meanwhile, faster electricity and rental rates drove up inflation for restaurants and accommodation services to 4% in January from 2.4% in December. This was the fastest clip since the 4.1% in September 2024.

For restaurants, cafés and the like, inflation picked up to 4.1% in January, from 2.6% in December.

“Energy prices are also rising because, of course, you’re using electricity — maybe rent, since rental prices for places are going up too, plus perhaps wages. So, these are contributing factors to those increases,” Mr. Mapa said.

However, slower inflation for the heavily weighted food and nonalcoholic beverages index tempered overall price pressures in January. 

Food inflation eased to 1.1% from 1.4% in December, as better weather conditions boosted local agriculture production and normalized prices.

Particularly, inflation for vegetables, tubers, plantains, cooking bananas and pulses slowed sharply to 3.3% from 11.6% in the previous month.

“The floods are over now. So, our provinces are producing again, particularly in Luzon,” Mr. Mapa said, adding that prices of some vegetables have normalized.

The PSA likewise saw slower price growth for corn, meat and other parts of slaughtered land animals, fish and other seafood, as well as oils and fats.

RICE PRICES
On the other hand, the decline in rice prices slowed to -8.5% year on year in January after nine straight months of double-digit dips. 

This marked a softer drop from -12.3% in December and was the slowest decline in rice prices in 10 months or since -7.7% in March 2025.

In January, the average price of local regular milled rice fell by 10.28% to P43.29 per kilo from P48.25 per kilo a year ago but inched up by 4.34% from P41.49 in December, according to the PSA. 

Well-milled rice was likewise cheaper by 7.55% year on year at P50.05 per kilo from P54.14 but climbed by 3.73% from P48.25 in December. On the other hand, the cost of special rice edged down by an annual 5.29% to P59.79 per kilo from P63.13 but went up by 2.42% month on month from P58.38.

The Philippines reopened its market to imported rice on Jan. 1 after the government imposed a four-month ban in September.

PSA data showed that core inflation, which excludes volatile prices of food and fuel, likewise accelerated to 2.8% in January, from 2.6% in the same month last year and 2.4% in December.

January saw the fastest core inflation in one-and-a-half years or since the 2.9% print in July 2024.

Meanwhile, inflation in the National Capital Region (NCR) bucked the national trend, easing to 1.9% in January, from 2.3% in December and 2.8% in the prior year.

However, inflation in areas outside NCR matched the nationwide CPI at 2%, accelerating from 1.7% a month ago. Year on year, it cooled from 2.9%.   

Inflation for the bottom 30% of income households was also faster at 1.6% in January from 1.1% in December. However, it eased from 2.4% logged a year earlier.

Meanwhile, Mr. Mapa noted that the PSA is working on rebasing the CPI to 2025 from the current 2018, with the first 2025-based inflation report likely to be released by January 2027.

“Currently, the technical staff is identifying the weight adjustments using our 2025 Family Income and Expenditure Survey, as it’s still [ongoing],” he added.

EASING PATH
With inflation starting to pick up, the central bank may now be more cautious about further monetary policy easing.

Still, analysts see a sixth straight cut at the Monetary Board’s Feb. 19 review remaining on the table, especially amid lingering growth woes. 

“All in all, we think January’s CPI has made the path to further rate cuts rougher,” HSBC Global Investment Research ASEAN economist Aris D. Dacanay said in an e-mailed commentary. “Although growth has slowed to its slowest pace since 2011, barring the COVID-19 pandemic, inflation hasn’t been as benign as warranted over the past two months.”

“Cognizant of this risk, we still think the BSP will likely cut its policy rate in February, since we expect growth concerns to outweigh inflation when deliberating monetary policy,” he added.

Mr. Dacanay noted that the government’s move to lift its rice import freeze and the muted demand could impact commodity prices in the months ahead.

On the other hand, Chinabank Research projects that base effects would push headline inflation  to the upper end of the central bank’s target by the second quarter.

Food supply issues, elevated energy prices and higher transport fares as well as minimum wages could bring price pressures, it added.

“Still, with inflation projected to average within target this year, we think the BSP has room to continue cutting interest rates, possibly at its Feb. 19 meeting, to help support the sluggish economy,” Chinabank Research said in a note.

For 2026, the BSP expects inflation to average 3.2%.

“The inflation outlook continues to be benign while inflation expectations remain well anchored,” the central bank said in a statement. “For 2026 and 2027, inflation is expected to settle within the 3% ± 1 ppt target.”

The benchmark policy rate stands at an over-three year low of 4.5%, after the Monetary Board delivered a total of 200 basis points  (bps) in cuts since it began its easing cycle in August 2024.

“On balance, the Monetary Board sees the monetary policy easing cycle as nearing its end. Any further easing is likely to be limited and guided by incoming data,” it said.

BSP Governor Eli M. Remolona, Jr. earlier said that they could help spur demand to boost the economy by easing borrowing costs, if such a move would still ensure that inflation will remain low.

He left the door open to a 25-bp cut this month after fourth-quarter growth turned out weaker than they anticipated but noted that inflation will be their top consideration.

However, the Monetary Board maintained that they are nearing the end of the current easing cycle.