Analysts mixed on January inflation

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

February 2, 2026 | 12:00am

MANILA, Philippines — Analysts are divided on whether inflation picked up or eased in January from a month prior, with forecasts clustered near that level as food and energy pressures were partly offset by lower utility and vegetable costs.

The Bangko Sentral ng Pilipinas (BSP) has said January inflation would likely settle within the 1.4 to 2.2 percent range from December’s 1.8 percent print, reflecting opposing price movements across major components.

The Philippine Statistics Authority will release the official January inflation data on Feb. 5.

“Headline inflation likely remained steady at 1.8 percent year on year in January as food and energy pressures offset easing utility and vegetable costs,” BPI lead economist Jun Neri said.

Neri attributed the slight monthly uptick mainly to higher fish and rice costs alongside elevated global oil and cooking gas prices. Neri also noted that rice prices have been climbing on a monthly basis.

“Rice inflation has risen month on month for three consecutive months, with sharper gains since December, reflecting weaker local production in the fourth quarter due to weather-related disruptions and high fertilizer costs,” he said.

These pressures, however, were tempered by utilities and fresh produce.

“These upward pressures were partly offset by lower Manila Electric Co. rates and cheaper vegetable prices, helping cap the overall inflation print,” Neri said.

Reyes Tacandong & Co. senior adviser Jonathan Ravelas also pegged steady inflation at 1.8 percent, driven mainly by higher rice, fish and fuel prices.

However, he said “lower electricity rates helped soften the blow.”

PNB chief economist Alvin Arogo sees inflation edging slightly higher at two percent in January, while warning of firmer price pressures ahead.

“Our baseline inflation forecast is two percent for January and an average of 3.3 percent for 2026,” Arogo said. “We believe that faster inflation in the coming months is likely due to wage hike pass-through, utility rate adjustments and unfavorable rice base effect.”

In contrast, ANZ Research projects inflation to ease to 1.6 percent year on year in January from 1.8 percent in December, citing continued softness in key food and utility components.

“Persistent deflation in rice prices likely helped contain food inflation. Electricity tariffs were reduced in January, which will ease utilities inflation,” ANZ Research said in a report.

ANZ also pointed to a softer demand environment. “Over the medium term, the Philippines’ consumer spending will remain subdued as slowing public expenditure dampens overall sentiment,” it said.

The research firm said it expects a final 25-basis-point rate cut by the BSP in its meeting on Feb. 19.

The Monetary Board slashed the country’s key policy rate  by 25 basis points to 4.50 percent at its December meeting last year. The BSP has so far reduced borrowing costs by 200 basis points since it began its easing cycle in August 2024.

Metrobank chief economist Nicholas Mapa places January inflation at 1.9 percent, while highlighting broader growth concerns stemming from weak demand.

He said the latest gross domestic product (GDP) figures showed underlying softness in consumption. The Philippine economy grew by just three percent in the fourth quarter of 2025, bringing average expansion to 4.4 percent for the full-year.

“The fourth quarter GDP report disappointed as public construction fell nearly 42 percent,” Mapa said. “The bigger surprise however was sustained moderation in the backbone of the economy: household spending.”

“Consumption grew a modest 3.8 percent, down from 4.1 percent in the previous quarter,” he added. “It is now the slowest pace reported since 2010 (excluding the pandemic).”

Mapa also noted that several spending categories contracted.

“Spending on alcohol and tobacco, clothing and footwear, utilities and furnishings were all in the red while consumption of food also slipped to 3.8 percent despite lower inflation and lower rice prices,” he said.

Looking ahead, Mapa said growth could improve this year. “GDP growth is expected to rebound in 2026 as the government steps up efforts to jumpstart public construction,” he said.

“This, alongside the return of the Filipino consumer could help the Philippine economy get back to hitting its true growth potential.”