Headline inflation eased further to 1.5 percent in November, the Philippine Statistics Authority (PSA) reported today — down from October’s 1.7 percent and sharply lower than the 2.5 percent recorded in November 2024.

This is the country’s lowest inflation print in three months, moving even farther below the Bangko Sentral ng Pilipinas’ (BSP) 2 to 4 percent target range for the year.

Slower price increases in food

The PSA said the decline was mainly due to slower price increases in food and non-alcoholic beverages, as well as in furnishings, household equipment, and routine household maintenance, and personal care and miscellaneous goods and services.

Inflation refers to the sustained rise in the general prices of goods and services. In the Philippines, inflation typically comes from supply-side pressures such as food and fuel costs, weather disruptions, and peso depreciation, which makes imports more expensive.

Demand-side factors — like strong consumer spending or easier credit — can also push prices upward, while expectations of future cost increases often lead firms to raise prices preemptively. Structural issues such as logistics bottlenecks and regulated price adjustments may likewise intensify inflationary pressures.

A lower inflation rate generally supports economic stability by protecting household purchasing power, improving business planning, and giving the central bank more room to ease policy rates if needed. 

But if inflation drops too far or too quickly, it can reflect weakening demand, reduce corporate profitability, and heighten the real burden of debt. Extremely low inflation also limits policy flexibility and risks moving the economy toward deflation.

Signs of improving 

economic conditions

In a press briefing at Malacañang Palace, presidential spokesperson Claire Castro hailed the latest print as a sign of improving economic conditions.

“Maganda ang ipinapakita ng pagbaba ng inflation rate (The decline in the inflation rate is showing good results),” Castro said. “Hindi maiiwasan because of the political noise na talaga namang maapektuhan ang ating ekonomiya (It’s unavoidable that because of the political noise, our economy will really be affected),” she added, noting that continued investigations into the “Floodgate” scandal will help economic recovery.

Lower headline inflation provides the BSP greater room for a possible policy rate cut — a move that could stimulate economic activity if domestic liquidity is managed carefully. 

Mandated ‘quiet period’

The central bank is now in its mandated “quiet period,” barring officials from discussing policy decisions ahead of the Monetary Board meeting on Thursday, 11 December.

“The November 2025 inflation outturn is within the BSP’s forecast range of 1.1 to 1.9 percent. Inflation is projected to average below the low-end of the target range in 2025, primarily due to the decline in rice prices in previous months,” the BSP said in a statement.

“The Monetary Board likewise noted that the outlook for domestic economic growth has weakened,” the central bank added, noting the slowdown was brought about in large part due to decreased investor confidence due to the “Floodgate” saga.

Poised to miss growth target

BSP Governor Eli M. Remolona Jr. said on Wednesday that the Philippines is poised to miss its 5.5–6.5 percent growth target for 2025 due largely to governance and corruption issues. 

However, he remains optimistic that a recovery will begin by mid-2026, supported in part by easing inflation and potential monetary adjustments.

“I think we all agree that for 2025, growth will be slow. We think maybe 4 percent, between 4 percent and 5 percent, but the recovery should start by 2026, maybe middle of 2026, and then we should be back on track by 2027,” Remolona said.