By Katherine K. Chan, A reporter
PHILIPPINE INFLATION accelerated to a 13-month high in February as rising costs of rice, fuel, electricity and other utilities added pressure to the domestic budget, the Philippine Statistics Authority said Thursday.
The consumer price index (CPI) rose to 2.4% from 2% in January and 2.1% in February 2025. It was the fastest since January 2025, when inflation reached 2.9%.
Inflation in February fell within the Bangko Sentral ng Pilipinas’ (BSP) forecast of 2.3%-3.1% and matched the average of 2.4% over the period BusinessWorld a survey of 17 analysts.
February was also the second month in a row that inflation stayed within the central bank’s 2%-4% target, bringing the two-month inflation rate to 2.2%.
“Overall price conditions remain stable,” Economic Secretary Arsenio M. Balisacan said in a statement. “However, we are mindful of recent developments in the country, which we are closely monitoring, as well as domestic supply conditions for essential goods.”
The purchasing power of the peso remained at P0.76 for all P100 worth of goods and services in 2018, the same level recorded in January and the lowest since the first year of adoption.
National Statistician Claire Dennis S. Mapa said the rapid increase in prices of food and non-alcoholic beverages, housing and utilities and restaurants and residential services boosted inflation last month.
Inflation for food and alcoholic beverages rose to 1.8% from 1.1% in January, driven by higher prices of vegetables, fish and seafood, and a slight decline in grain and cereal products.
Inflation in restaurants and lodging also rose to 4.4% from 4% last month. Prices for restaurants, cafes and other similar establishments rose 4.5% from the 4.1% pace in January.
Inflation, which strips out volatility in food and fuel prices, eased to 2.9% in February from 2.8% in January and 2.4% last year. This was very fast from June 2024.
ENERGY COSTS
Inflation for housing, water, electricity, gas and other fuels, which accounted for about 30% of the headline CPI, rose to 3.5% in February from 3.3% the previous month.
Gasoline prices have been rising slightly in recent weeks, with diesel and kerosene notching 10 consecutive weekly increases and gasoline rising for eight straight weeks.
In February alone, the pump price adjustment resulted in a total increase of P3.20 per liter for gasoline, P4.40 for diesel and P3.50 for kerosene.
Liquefied petroleum gas (LPG) prices also rose after oil companies implemented a P1.50- to P1.55-per-kilo increase, bringing the price of an 11-kilogram domestic tank from P836.50 to P1,137.05.
Rising tensions in the Middle East have raised concerns about possible disruptions in global oil supplies, which could raise energy costs for oil buyers in countries like the Philippines.
The Ministry of Economy, Planning and Development said authorities are monitoring fuel price movements and may intervene if global oil prices rise significantly.
“Also, the government will use methods to reduce fuel consumption, starting with the governmentfand we encourage private companies to do the same,” said Mr. Balisacan.
These measures include the use of buses, promoting carpooling and adopting flexible working arrangements such as working from home or compressed work weeks.
Electricity costs also increased after the Manila Electric Co. increased its rate by 22.26 centavos per kilowatt-hour (kWh) in February to P13.1734 per kWh from January. Electricity inflation increased to 6.7% from 6.5%.
Rent inflation also increased to 3% from 2.9%, while water supply inflation increased to 4% from 3.5%.
Rice prices, the main driver of Philippine inflation, showed signs of firming in February.
Rice inflation remained negative at -3.4%, but this was a slight decrease from -8.5% in January, indicating a gradual rebound in prices.
Regularly milled rice prices fell 2.5% year-on-year to an average of P46.01 per kilo but rose 5.14% compared to January levels.
Mr. Mapa said rice inflation could approach zero – or turn positive – if the monthly price increase continues in March.
Meanwhile, inflation for the bottom 30 percent of income households rose to 2.5% in February from 1.6% in January and 1.5% last year, the fastest in more than a year.
INFLATION OUTLOOK
The BSP said inflation expectations remained firm despite February’s high, although authorities are assessing the potential impact of Middle East tensions on the domestic economy.
“The BSP will ensure that policy settings remain consistent with the pursuit of price stability that allows for sustainable growth and employment,” the statement said.
Jonathan L. Ravelas, senior consultant at Reyes Tacandong & Co., said the latest data points to growing risks, especially in global oil markets.
“While inflation remains under control, the third straight monthly increase tells us there are risks – especially if the global oil supply disruption continues,” he said via Viber.
Chinabank Research said inflation could reach 3.6% this year, close to the upper end of the BSP’s target, although the outlook could worsen if political tensions persist.
Morningstar DBRS also warned that oil-importing economies such as the Philippines remain vulnerable to rising energy costs and potential supply disruptions caused by the Middle East conflict.
The Bangko Sentral ng Pilipinas (BSP) should hold interest rates steady, rather than cut or raise them, amid rising global oil price pressures since the Middle East war, according to the Institute for Risk and Strategic Studies, Inc. (Salceda Research).
In a report released Wednesday, the think tank said further price adjustments may be unwise amid uncertainty over crude prices caused by disruptions related to the war between Israel and Iran.
“The right response is to pause, not to hike – inflation is supply-driven and rate hikes will not reduce oil prices,” Salceda Research said. “The BSP should clearly communicate that the easing cycle is on hold, not reversed, to avoid an overreaction of the market.”
The Strait of Hormuz, a critical oil transit area, has become a flashpoint after Israeli and US military attacks on Iran. About one-fifth of the world’s oil goes through the crisis, and any disruption could push up global oil prices, straining economies that rely on countries like the Philippines.
Salceda research estimated that sustained crude prices above $80 per barrel for more than a month could push the Philippine currency to 4%, near the upper end of the central bank’s target band. “Second round consumer price index results will push inflation to the 4% upper target border between the two quarters,” he added.
In its first policy review of 2026, the BSP cut the key interest rate by 25 basis points (bps) to 4.25%, the sixth consecutive cut and a total reduction of 225 bps from August 2024.
BSP Governor Eli M. Remolona, Jr. noted that the simple act alone may not stimulate the economy hampered by weak sentiments and ongoing administrative issues.
Salceda Research also warned that the Philippine peso may come under renewed pressure, possibly testing P59.50 to P65 per dollar.
The peso briefly rebounded to around P57 per dollar last month after hitting a record low in January but remained above P58 amid political uncertainty.
“The BSP should allow the peso to depreciate within the P59.50-P61 band… [only] to prevent inappropriate firing beyond the P62,” the think tank said.
Faster moves in excess of P62 could front-load liquidity and trigger outflows, it said. “The intervention of graduates, and transparency is better than protecting a fixed standard.
