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Inflation Slows To A Six-Year Low In The Philippines - What's Behind The Drop?
Photo credit: DA
The Philippines’ inflation rate cooled further in May 2025, settling at 1.3 percent, a notch lower than the 1.4 percent recorded in April. This marks the lowest rate since November 2019, when inflation dipped to 1.2 percent. With this, the average inflation for the first five months of the year now stands at 1.9 percent — a significant slowdown compared to 3.9 percent in the same period last year.
What’s Pulling Inflation Down?
The continued easing of inflation was mainly due to slower price increases in several major sectors. Leading the trend was housing, water, electricity, gas, and other fuels, where inflation slowed to 2.3 percent from 2.9 percent in April. Prices in restaurants and accommodation services also eased, growing by just 2.0 percent compared to 2.3 percent the month prior.
Transport costs, which have been on a steady decline, dropped even faster in May — down by 2.4 percent, compared to a 2.1 percent drop in April. Similarly, household furnishings and maintenance showed a modest rise of just 2.0 percent.
However, not all sectors followed suit. Slight upticks were observed in:
• Alcoholic beverages and tobacco (3.8% from 3.7%)
• Information and communication (0.4% from 0.3%)
• Recreation, sport and culture (2.2% from 2.1%)
• Education services (4.3% from 4.2%)
What’s Still Driving Inflation?
Despite the overall slowdown, some groups continue to push inflation upward. The top three contributors to May’s headline inflation were:
• Housing and utilities – 37.1% share (0.5 percentage point)
• Food and non-alcoholic beverages – 25.7% share (0.3 percentage point)
• Restaurants and accommodation services – 15.5% share (0.2 percentage point)
Food Prices Remain Steady — But What’s Going On Inside the Basket?
Food inflation remained unchanged at 0.7 percent, a sharp contrast to 6.1 percent in May 2024. Although stable, certain food items continue to heavily influence overall prices:
• Meat and other land animal products contributed the most, accounting for 216.6% of the food inflation, equivalent to a 1.5 percentage point impact.
• Fish and seafood followed at 133.6%, contributing 0.9 percentage point.
• Milk, dairy products, and eggs added 0.4 percentage point.
What About Core Inflation?
Core inflation — which strips out volatile food and energy prices — held steady at 2.2 percent in May. This remains lower than the 3.1 percent posted in the same month last year, indicating a broader cooling in prices across consumer goods and services.
Regional Picture: NCR and Beyond
In Metro Manila (NCR)
The inflation rate in the National Capital Region also slowed significantly to 1.7 percent in May from 2.4 percent in April. Key contributors to this decline included lower prices in:
• Housing and utilities (3.1% from 5.1%)
• Restaurant and accommodation services (1.2% from 1.9%)
• Food and non-alcoholic beverages (2.2% from 2.5%)
Minor slowdowns were also seen in health and personal care services.
Outside Metro Manila (AONCR)
In the rest of the country, inflation held steady at 1.2 percent for the second consecutive month. Although overall stable, inflation ticked up in:
• Health
• Recreation, sport and culture
• Education services
• Restaurants and accommodation services
• Personal care and miscellaneous goods
Interestingly, Northern Mindanao (Region X) posted a zero inflation rate, while SOCCSKSARGEN and BARMM saw declining prices. On the other end, the Cordillera Administrative Region had the highest regional inflation at 2.5 percent.
What This Means for Filipinos
The continued drop in inflation is a welcome development for Filipino households, signaling slower price increases in basic goods and services. While some categories remain elevated, the broader trend suggests growing price stability — a sign that economic policies, global commodity prices, and supply chain factors may be aligning in favor of Filipino consumers.
As inflation softens, policymakers will likely keep a close eye on sectors that are still seeing price pressures, especially in food, education, and fuel, to ensure inflation remains manageable in the months ahead.
What’s Pulling Inflation Down?
The continued easing of inflation was mainly due to slower price increases in several major sectors. Leading the trend was housing, water, electricity, gas, and other fuels, where inflation slowed to 2.3 percent from 2.9 percent in April. Prices in restaurants and accommodation services also eased, growing by just 2.0 percent compared to 2.3 percent the month prior.
Transport costs, which have been on a steady decline, dropped even faster in May — down by 2.4 percent, compared to a 2.1 percent drop in April. Similarly, household furnishings and maintenance showed a modest rise of just 2.0 percent.
However, not all sectors followed suit. Slight upticks were observed in:
• Alcoholic beverages and tobacco (3.8% from 3.7%)
• Information and communication (0.4% from 0.3%)
• Recreation, sport and culture (2.2% from 2.1%)
• Education services (4.3% from 4.2%)
What’s Still Driving Inflation?
Despite the overall slowdown, some groups continue to push inflation upward. The top three contributors to May’s headline inflation were:
• Housing and utilities – 37.1% share (0.5 percentage point)
• Food and non-alcoholic beverages – 25.7% share (0.3 percentage point)
• Restaurants and accommodation services – 15.5% share (0.2 percentage point)
Food Prices Remain Steady — But What’s Going On Inside the Basket?
Food inflation remained unchanged at 0.7 percent, a sharp contrast to 6.1 percent in May 2024. Although stable, certain food items continue to heavily influence overall prices:
• Meat and other land animal products contributed the most, accounting for 216.6% of the food inflation, equivalent to a 1.5 percentage point impact.
• Fish and seafood followed at 133.6%, contributing 0.9 percentage point.
• Milk, dairy products, and eggs added 0.4 percentage point.
What About Core Inflation?
Core inflation — which strips out volatile food and energy prices — held steady at 2.2 percent in May. This remains lower than the 3.1 percent posted in the same month last year, indicating a broader cooling in prices across consumer goods and services.
Regional Picture: NCR and Beyond
In Metro Manila (NCR)
The inflation rate in the National Capital Region also slowed significantly to 1.7 percent in May from 2.4 percent in April. Key contributors to this decline included lower prices in:
• Housing and utilities (3.1% from 5.1%)
• Restaurant and accommodation services (1.2% from 1.9%)
• Food and non-alcoholic beverages (2.2% from 2.5%)
Minor slowdowns were also seen in health and personal care services.
Outside Metro Manila (AONCR)
In the rest of the country, inflation held steady at 1.2 percent for the second consecutive month. Although overall stable, inflation ticked up in:
• Health
• Recreation, sport and culture
• Education services
• Restaurants and accommodation services
• Personal care and miscellaneous goods
Interestingly, Northern Mindanao (Region X) posted a zero inflation rate, while SOCCSKSARGEN and BARMM saw declining prices. On the other end, the Cordillera Administrative Region had the highest regional inflation at 2.5 percent.
What This Means for Filipinos
The continued drop in inflation is a welcome development for Filipino households, signaling slower price increases in basic goods and services. While some categories remain elevated, the broader trend suggests growing price stability — a sign that economic policies, global commodity prices, and supply chain factors may be aligning in favor of Filipino consumers.
As inflation softens, policymakers will likely keep a close eye on sectors that are still seeing price pressures, especially in food, education, and fuel, to ensure inflation remains manageable in the months ahead.
Jun 5, 2025
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