THE country’s headline inflation rate picked up to 1.5 percent in August 2025 from 0.9 percent in July, the Philippine Statistics Authority (PSA) reported Friday, Sept. 5, 2025.
This brought the national average inflation from January to August 2025 to 1.7 percent, lower than the 3.3 percent recorded in the same period last year.
The August figure remained within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 1.0 to 1.8 percent. The BSP expects inflation to average below the low end of its two to four percent target range for full-year 2025, largely due to the continued easing of rice prices.
The uptick in inflation was mainly driven by higher prices of food and non-alcoholic beverages, which rose 0.9 percent in August from a 0.2 percent decline the previous month. Transport also posted a slower annual decline of 0.3 percent, easing from a 2.0 percent drop in July.
Other commodity groups that saw faster price increases during the month included furnishings and household equipment (2.4 percent), health (2.9 percent), information and communication (0.6 percent), and personal care and miscellaneous goods and services (2.5 percent).
Meanwhile, lower inflation rates were noted for clothing and footwear (1.7 percent), housing and utilities (2.1 percent), recreation and culture (2.1 percent), and education services (2.9 percent).
The top contributors to August’s overall inflation were housing, water, electricity, gas and other fuels (0.4 percentage point), food and non-alcoholic beverages (0.4 percentage point), and restaurants and accommodation services (0.2 percentage point).
Food inflation turns positive
Food inflation returned to positive territory at 0.6 percent in August from a 0.5 percent decline in July. A year earlier, it was significantly higher at 4.2 percent.
The rise was largely due to higher prices of vegetables, tubers, plantains, cooking bananas, and pulses, which jumped 10.0 percent from a 4.7 percent decline the previous month. Fish and other seafood also accelerated to 9.5 percent in August from 6.3 percent in July.
Other food items that saw higher increases included oils and fats (8.9 percent) and ready-made food products (2.3 percent). Meanwhile, slower price declines were observed in corn (-11.8 percent) and sugar (-0.1 percent).
On the other hand, prices of meat (7.1 percent), dairy products and eggs (3.8 percent), and fruits and nuts (5.2 percent) posted slower increases compared to July. Rice prices fell further by 17.0 percent year-on-year in August, faster than the 15.9 percent drop in the previous month.
Food inflation contributed 0.2 percentage points to August’s headline inflation, with fish and seafood, meat, and vegetables as the top drivers.
Weather risks may drive prices higher
In a statement, Socioeconomic Planning Secretary Arsenio M. Balisacan emphasized the importance of closely monitoring the country’s weather outlook due to its potential impact on agricultural production. The Philippine Atmospheric, Geophysical and Astronomical Services Administration has forecast seven to 15 tropical cyclones between September 2025 and February 2026.
“While inflation remains broadly manageable, the recent figures highlight how adverse weather conditions directly impact prices,” Balisacan said.
He warned that La Niña conditions, which may develop from September to December, could trigger flooding and crop damage in high-risk areas. “In anticipation of these weather shocks, we must ramp up preparatory activities and proactively ensure sufficient food supply to protect Filipino consumers from price volatility,” he added.
BSP outlook
According to the BSP, the inflation outlook is broadly unchanged. For 2026 and 2027, inflation is expected to trend higher but remain within the three percent ± 1.0 percentage point target range. Inflation expectations also remain firmly anchored to the target, the central bank said.
The BSP flagged possible risks from electricity rate adjustments and higher rice tariffs, which could add upward pressure on prices over the policy horizon.
The Monetary Board also noted that domestic demand remains firm, although external headwinds — particularly the impact of US policies on global trade and investment — may temper Philippine growth prospects.
“Emerging risks will continue to require close monitoring. The Monetary Board will determine the monetary policy response based on the evolving outlook for inflation and growth,” the BSP said.
It added that going forward, the central bank will safeguard price stability by ensuring that monetary policy remains supportive of sustainable economic growth and employment.
Core inflation, which excludes volatile food and energy items, rose to 2.7 percent in August from 2.3 percent in July. This was slightly higher than the 2.6 percent recorded in August 2024. / KOC