Despite the challenges confronting the Philippines amid the flood control scandal, the country’s low inflation rate is expected to continue preserving purchasing power for the poorest households, Malacañang officials said on Sunday.
In a statement, the Presidential Communications Office (PCO) cited low headline inflation — which has averaged 1.7 percent over the first three quarters of the year, well below the government’s 2 to 4 percent target range for 2025 — as evidence of what it described as “decisive and coordinated action to stabilize prices, secure food supply, and protect household purchasing power.”
“To put this in perspective, a 6% inflation rate means that your P100 can buy only about P94 worth of goods and services. But with inflation down to just 1.6 percent in 2025, that same P100 can now buy about P98.4 worth of goods and services,” said Executive Secretary Ralph Recto.
Latest data from the Philippine Statistics Authority (PSA) showed November inflation easing further to 1.5 percent, the lowest in three months. The PSA attributed the slowdown mainly to weaker price increases in food and non-alcoholic beverages, furnishings and household equipment, routine household maintenance, and personal care and miscellaneous goods and services.
Low-income households saw even greater relief, with the bottom 30 percent of income earners experiencing deflation of 0.2 percent, marking a sixth consecutive month of declining prices. Inflation below target provided sufficient room for the Bangko Sentral ng Pilipinas (BSP) to cut its key policy rate by 25 basis points earlier this month to help stimulate economic activity heading into 2026.
The Department of Finance (DOF) has also pointed to improving rice prices, which averaged P44.19 per kilo, significantly lower than P52.59 per kilo a year earlier. The department said the national government has accelerated efforts to ensure a stable and affordable food supply ahead of the holiday season.
“That is why this is so important for every Filipino family, especially people with low income. When inflation is low, we are able to keep the prices of basic commodities affordable, especially food,” Recto added.
While low inflation brings clear benefits, economists caution that it may also reflect weakening demand, pressure corporate profitability, and increase the real burden of debt. Prolonged low inflation can limit policy flexibility and raise the risk of deflation. The BSP said its recent decision to lower the target reverse repurchase (RRP) rate was anchored on manageable inflation and ample domestic liquidity.
From a broader macroeconomic perspective, low headline inflation remains one of the few bright spots for the Philippine economy. Third-quarter gross domestic product (GDP) growth slowed sharply to 4.0 percent following the floodgate controversy, while BSP Governor Eli M. Remolona Jr. has said fourth-quarter growth may ease further to around 3.8 percent.
Malacañang also cited cautious optimism from institutions such as Standard and Poor’s, the Asian Development Bank, the World Bank, and the International Monetary Fund — all of which have revised their Philippine growth forecasts downward following the emergence of the flood control scandal.
Recto himself has been drawn into the controversy. On 23 December, the former finance secretary was hit with complaints before the Office of the Ombudsman for plunder, technical malversation, and grave misconduct over the transfer of P60 billion in PhilHealth reserve funds to the National Treasury — an action he authorized during his tenure as DOF chief and which the Supreme Court has unanimously ruled unconstitutional.
The funds were later allegedly funneled into unprogrammed appropriations used to finance flood control projects, Batangas 1st District Representative Leandro Leviste previously disclosed on DAILY TRIBUNE’s Straight Talk.
The BSP has said it may be nearing the end of its monetary easing cycle, although Remolona noted that an additional rate cut at the Monetary Board’s February meeting remains possible, depending on economic conditions. He added that the central bank expects the economy to rebound “by the middle of next year.”