Jan inflation steady at 2.9%, within govt target

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BSP cites room for rate cuts

Price increases of key commodity groups remained relatively steady in January, with headline inflation keeping the 2.9 percent rate for the second month in a row, and inching up only slightly from 2.8 percent a year earlier, the Philippine Statistics Authority (PSA) said yesterday.

PSA data released on Wednesday showed faster annual increases in the indices of food and non-alcoholic beverages, alcoholic beverages and tobacco, and transport.

Balancing that out were slower rises in the prices of clothing and footwear, household equipment and maintenance; recreation; education services; restaurants and accommodation services; and personal care, and miscellaneous goods and services. 

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Core inflation, which excludes selected food and energy items, slowed to 2.6 percent in January this year from 2.8 percent in December 2024 and from the year-earlier 3.8 percent, National Statistician and Civil Registrar General Claire Dennis S. Mapa told reporters in a news conference. 

Within govt forecast

The Bangko Sentral ng Pilipinas (BSP) said the latest inflation outturn “is consistent with its assessment that inflation will remain anchored to the target range over the policy horizon.”

The BSP’s forecast range for January was 2.5 to 3.3 percent. For full-year 2025, BSP is targeting inflation to average between 2 and 4 percent.

“The rice tariff reduction and negative base effects are expected to support disinflation,” Eli Remolona, BSP Governor, said in a statement.

Most analysts interviewed by Malaya Business Insight had expected headline inflation for January this year to ease from the 2.9 percent rate posted in December last year.

Going forward, the central bank governor cited the major factors that could push inflation upward or downward in the months ahead.

“The balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates. The impact of lower import tariffs on rice remains as the main downside risk to inflation,” Remolona said.

Arsenio Balisacan, National Economic and Development Authority (NEDA) secretary, views the steady inflation rate in January as a positive indicator of the government’s commitment to ensure more stable prices.

“Reducing food inflation remains one of the government’s most pressing priorities. Due to the lingering effects of last year’s consecutive typhoons, food inflation at the national level rose to 4.0 percent in January 2025 from 3.5 percent in December 2024,” Balisacan said.

The NEDA secretary said President Ferdinand Marcos, Jr. has emphasized that “there should be no room for complacency as we work toward our targets this year and the medium-term.”

“We remain vigilant and proactive in anticipating and addressing future developments, whether upside or downside risks, unforeseen or otherwise. Resiliency of our agri-food systems will be one of our most important goals to ensure low and stable prices for all Filipinos,” Balisacan added.

Room for rate cuts

Finance Secretary Ralph Recto pointed to some room for policy rate cuts during the year, saying that the low and steady inflation rate of 2.9 percent in January 2025 gives the BSP room to cut its policy interest rates, which in turn could boost household spending and economic growth. 

“This is a strong indicator of the government’s commitment to keeping prices stable and signals that the BSP has more flexibility to further reduce interest rates. Lower interest rates mean cheaper borrowing costs for our consumers and businesses. This will provide greater purchasing power for our people and stronger momentum for investments and growth,” Recto said.

Recto also noted significant improvement in rice inflation.

 “This is a welcome relief for Filipino consumers. But rest assured, the government will not be complacent. We will remain proactive in implementing interventions to ensure stable and affordable rice prices,” Recto said.

On Feb 3, 2025, the Department of Agriculture (DA) declared a food security emergency that allowed the release and sale of rice buffer stocks from the National Food Authority (NFA) at lower prices to select government agencies and to the public through the Kadiwa ng Pangulo sites.

By region

Details of the PSA report showed inflation in the National Capital Region (NCR) decelerated to 2.8 percent in January 2025 from 3.1 percent the previous month. In January 2024, inflation rate in the area was recorded at 2.8 percent. The slowdown in the NCR was driven mainly by lower annual increments in housing, water, electricity, gas and other fuels at 2.2 percent during the month, from 3.0 percent in December 2024.

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Inflation in areas outside NCR, meanwhile, also remained steady at 2.9 percent in January 2025, the same annual rate recorded in December 2024. In January 2024, inflation in the area was recorded at 2.8 percent. Mapa said eight regions in areas outside NCR exhibited higher inflation rates in January 2025.

For the third consecutive month, Region II (Cagayan Valley) remained as the region with the highest inflation rate at 5.1 percent, while Region XII (SOCCSKSARGEN) still registered the lowest inflation rate at 1.1 percent.

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