Poll: Jan inflation seen steady at 1.8%
Inflation likely remained steady in January, as declines in electricity rates and vegetable prices offset higher fuel costs and increases in other staple foods—a balance that may give the central bank room to cut interest rates further if warranted.
The consumer price index is expected to come in at 1.8 percent for the first month of 2026, according to the median estimate of 15 economists surveyed by the Inquirer last week.
If borne out, the reading—to be released on Feb. 5—would match December’s pace of price gains. It would also fall within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 1.4 to 2.2 percent, marking the 11th consecutive month that inflation has remained below the central bank’s 2- to 4-percent target.
Jun Neri, lead economist at Bank of the Philippine Islands, said easing utility rates and cheaper vegetables likely helped offset pressures from food and energy prices. His January forecast matched the consensus, though he pointed to higher fish and rice prices, elevated global oil costs and more expensive cooking gas.
Rice inflation has been rising month by month, he said, reflecting weaker domestic output in the fourth quarter of 2025, partly due to weather disruptions and high fertilizer costs.
“These upward pressures were partly offset by lower Meralco rates and cheaper vegetable prices, helping cap the overall inflation print,” Neri explained. “Looking ahead, while inflation is expected to trend higher through 2026 as favorable base effects from last year’s rice price declines fade, the headline figures are still expected to remain within the target of the central bank.”
Some economists, however, see inflation picking up more sharply. Alvin Arogo, chief economist at Philippine National Bank, said prices may have risen 2 percent in January, with faster gains likely in the months ahead because of wage increases, utility adjustments and data distortions from last year’s low rice prices. Sarah Tan, economist at Moody’s Analytics, gave a similar forecast as she noted the impact of a weaker peso on imports.
Miguel Chanco, Pantheon Macroeconomics’ chief economist for emerging Asia, penciled in an even higher 2.5-percent reading, citing rising food costs. “There appears to have been a spike in egg prices in some parts of the country,” he said.
Overall, the streak of subdued inflation could give the BSP enough space to further lower borrowing costs to support an economy that significantly slowed last year as the country grapples with a massive corruption scandal, which has weakened state spending and created a crisis of confidence. Gross domestic product expanded 3 percent in the fourth quarter of 2025—the slowest pace in more than 14 years and well below the median estimate of 4.2 percent in a poll of 14 economists by the Inquirer.
The outturn brought full-year growth to 4.4 percent, missing the government’s 5.5- to 6.5-percent target and falling short of the 4.8 percent consensus forecast.
Earlier, BSP Governor Eli Remolona Jr. said the fourth-quarter growth figures would help inform the central bank’s decision on whether further cuts to borrowing costs were needed to support the economy.
Remolona emphasized, however, that policymakers would remain guided by their primary mandate of maintaining price stability. Since beginning its easing cycle in August 2024, the BSP has lowered its benchmark policy rate by a total of two percentage points, bringing it to 4.5 percent.
“Over the medium term, the Philippines’ consumer spending will remain subdued as slowing public expenditure dampens overall sentiment,” economists at ANZ Research said. They expected last month’s consumer prices to have eased to 1.6 percent.
“This further solidifies our expectation of a final 25-basis point rate cut by the Bangko Sentral ng Pilipinas in its meeting [in February],” they added.
******
Get real-time news updates: inqnews.net/inqviber
