Poll: Inflation likely steady in Dec 2025
Muted price pressures, even as holiday demand typically accelerates, likely kept inflation steady in December, pulling the 2025 average below the government’s target range and giving the central bank room to cut interest rates further if needed.
Consumer prices may have risen 1.5 percent in December, according to the median estimate of 11 economists surveyed by the Inquirer. If realized, the figure—due to be released on Jan. 6—would match November’s pace and fall within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 1.2 to 2 percent for the month.
That outcome would bring average inflation for 2025 to about 1.6 percent, undershooting the BSP’s target band of 2 to 4 percent.
Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said demand-side pressures, which typically intensify during the holiday season, were unusually subdued as households turned cautious.
Consumer confidence fell to a pandemic-era low of -22.2 percent in the fourth quarter, he noted, citing a central bank survey conducted amid a widening corruption scandal that has weighed on economic activity and eroded public trust in the government.
Weaker consumption, combined with easing supply-side pressures, helped cap price gains.
“Easing global oil prices and cooler weather helped temper energy costs, while rice deflation likely persisted, though its impact is diminishing,” Asuncion said. He estimated December inflation at 1.2 percent.
Not all economists agree on the extent of the slowdown. Sarah Tan, an economist at Moody’s, warned that late-season typhoons may have disrupted food supply chains enough to push inflation higher, even with low rice prices. She estimated December inflation at 1.7 percent.
“Damage to infrastructure and farmland, along with widespread displacement, has disrupted logistics and supply chains and reduced agricultural output,” Tan said.
“These conditions will exert upward pressure on prices, not just for food but also for utilities, fuel and essential services, which are vulnerable when power lines, roads and supply routes are impaired,” she added.
Against that backdrop, the BSP cut its benchmark rate by a quarter point to 4.5 percent at the Monetary Board’s Dec. 11 meeting, seeking to offset the economic drag from a widening anticorruption campaign. The move brought total rate reductions since the easing cycle began in August 2024 to 2 percentage points.
Additional rate cuts
Governor Eli Remolona Jr. had said any additional rate cuts this year would likely be limited to a single 25-basis-point move, adding that the central bank would steer clear of outsized or off-cycle actions that could unsettle markets. Ultimately, Remolona declared that the easing cycle is “nearing its end.”
Still, some economists see scope for another reduction. Alvin Arogo, an economist at Philippine National Bank, said this week’s inflation data would support a further cut early in the year. His prediction for last month’s inflation rate matched the consensus.
“The BSP might bring down the target reverse repurchase rate to 4.25 percent early this year before shifting its stance to a long pause,” Arogo said, citing expectations of weak fourth-quarter growth in 2025 and a temporary rise in inflation that could peak at 3.9 percent in the second quarter of 2026.
Looking ahead, economists at Chinabank Research said inflation could move back into the central bank’s target range this year, partly due to base effects. They flagged risks from adverse weather, higher rice tariffs, the spread of African swine fever, geopolitical tensions that could lift oil prices, electricity rate increases, transport fare hikes and larger-than-expected minimum wage adjustments.
“We estimate that inflation likely settled at 1.6 percent in December,” they added.
