Inflation Preview: Sliding below target in 2025

While the Bangko Sentral ng Pilipinas (BSP) continued its easing cycle to support sluggish growth, the central bank’s rate cuts may still take time to manifest in the greater economy and price levels.

With this, Metrobank expects headline inflation to settle at 1.4% year-on-year in December, bringing full year inflation to 1.6%.

Rice prices still on a sleigh ride

Earlier this year, rice inflation was widely expected to revert to positive territory. However, recent price moves suggest that rice deflation persisted until December. Still, the year-on-year decline in prices of the grain continues to slow, as the import ban on regular-milled and well-milled rice remains in place.

The import ban was implemented by the government to help curb falling rice prices and support local rice farmers amid an oversupply. As of mid-December, rice imports have dropped by 30% compared to last year. The measure will be in place only until year-end and will be lifted in January, following the harvest season.

Most wonderful time of the year

Preliminary data show that food prices picked up from last month, suggesting increased demand, as households stock up on food ahead of the holidays. With this, food prices—particularly vegetables, fruits, meat, and fish—continue to exert pressure on headline inflation in December.

Cold, but only outside

Transport and electricity prices are still expected to provide upside pressure to inflation, though at a slower pace than last month.

On average, pump prices for both unleaded and diesel in the capital region increased at a slower pace year-on-year throughout December. Globally, oil prices also rose in the latter half of the month on the back of escalating tensions between the US and Venezuela.

On the other hand, this month saw major electricity providers Manila Electric Company and Davao Light and Power Company lowering their rates. Meanwhile, Visayan Electric Company raised their rates. Even with mixed month-on-month movements, rates remain elevated year-on-year across all three providers.

Metrobank’s take

Food inflation continues to exert upward pressure to headline inflation this month, with holiday demand providing a push to prices. Elevated oil and electricity prices also add to the weight. Metrobank forecasts headline inflation at 1.4% year-on-year in December.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)  

MARIA KAILA BALITE is a Research Officer of the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. She holds a Master’s degree in Applied Economics and also majored in Financial Economics for her Bachelor’s degree, both from De La Salle University Manila. Outside of work, she enjoys watching thriller movies and K-dramas.


JOAQUIM PANTANOSAS is a Research Officer of the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. He holds a BS in Statistics from the University of the Philippines-Diliman, where he developed an interest in quantitative research as a tool for complex problem-solving. He enjoys a good laugh with the people he cares about.