BSP sees policy space as July inflation eases on lower rice prices

The Bangko Sentral ng Pilipinas (BSP) reported that inflation in July 2025 fell within its forecast range of 0.5 to 1.3 percent, settling at 0.9 percent – its lowest level since October 2019 – driven largely by the sustained drop in rice prices.

With inflation now projected to average below the lower end of the 2.0 to 4.0 percent target for the full year, the BSP signaled that a more accommodative monetary policy stance may be warranted. The central bank emphasized that easing price pressures offer room to support economic activity while remaining vigilant to potential risks.

Special Assistant to the President for Investment and Economic Affairs Frederick Go welcomed the continued slowdown in inflation, particularly the 0.5 percent drop in food prices, saying it brings “much-needed relief to Filipino households.”

“These developments underscore the administration's commitment to making food more accessible and affordable,” Go said.

“The Economic Team will continue to pursue measures that keep prices stable and make everyday life easier for every Filipino. We want Filipino families to feel the impact of economic growth in their homes.”

For 2026 and 2027, inflation is expected to rise but remain firmly within the target range. The BSP, however, warned that downside risks to growth are emerging due to slowing global economic activity, heightened geopolitical tensions in the Middle East, and uncertainty surrounding US trade policies.

Despite the easing trend, the BSP reiterated its commitment to maintaining price stability while ensuring that monetary policy remains supportive of sustainable growth and employment.