Manila: A turnaround in the domestic inflation rate, recorded at 0.9 percent in July 2025-the slowest since October 2019's 0.6 percent-has reinforced the projections by monetary authorities for a below-average inflation rate for the year.
According to Philippines News Agency, the latest inflation figure from the Philippine Statistics Authority marks a reversal from the 1.4 percent increase in June and brings the seven-month average to 1.7 percent, which is below the government's target of 2.4 percent. The Bangko Sentral ng Pilipinas (BSP) confirmed that this figure is within its forecast range of 0.5 to 1.3 percent for July.
The BSP stated that inflation is expected to average below the lower end of the target in 2025, primarily due to the continued easing of rice prices. National Statistician Claire Dennis Mapa noted that rice price inflation has been on a downtrend since at least August 2024.
The slowdown in inflation last July was also attributed to slower price increases in power and oil prices. The PSA data indicated that rice inflation significantly contributed to the annual slowdown in the food index, registering a 15.9 percent decline from a 14.3 percent drop in June. This was achieved as the government increased rice importation and lowered tariffs to address price rises in the early part of last year.
While inflation is expected to remain below-target this year, the BSP anticipates an increase to within-target levels for the next two years. It noted that global economic activity is showing signs of deceleration due to uncertainty over US trade policy and ongoing geopolitical conflicts in the Middle East, which may contribute to slower domestic growth.
Amid these developments, the BSP emphasized the need for a more accommodative monetary policy stance. The central bank's Monetary Board has reduced the BSP's key rates by a total of 50 basis points this year, as inflation continues to slow. BSP Governor Eli Remolona has hinted at the possibility of more hikes.
The statement highlighted that emerging risks to inflation from rising geopolitical tensions and external policy uncertainty will require closer monitoring. The BSP will continue to assess the impact of prior monetary policy adjustments to ensure that price stability is maintained while supporting sustainable economic growth and employment.
