By Katherine K. Chan, A reporter
PHILIPPINE INFLATION accelerated to its fastest pace in nearly a year in January amid rapid increases in rents and electricity prices, the Philippine Statistics Authority (PSA) reported.
Inflation rose to 2% from 1.8% in December but down from 2.9% in the same month last year.
This was the fastest pace seen in 11 months or since 2.1% in February 2025.
It also marked the first time in almost a year that the consumer price index (CPI) reached the Bangko Sentral ng Pilipinas’ (BSP) target of 2%-4%.
The January clip was also above the median forecast of 1.8%. BusinessWorld a study of 18 economists but it was within the central bank 1.4%-2.2% monthly average.
“The main reason for the higher rate of inflation in January 2026 compared to December 2025 is the rapid increase in the price of housing, water, electricity, gas, and other fuels, which recorded an inflation rate of 3.3%,” said National Statistician Claire Dennis S. Mapa press conference on Thursday.
Inflation for housing, water, electricity, gas and others rose to 3.3%, the fastest rate since 3.8% in August 2024.
According to PSA, this commodity group accounted for 45.9% of the overall increase in inflation in January.
On the downside, inflation rose to 6.5% year-on-year in January from a revised 4% in December, while rents rose 2.9% during the month from 2.4% in December.
This comes even after Manila Electric. Co. reduced electricity rates by 16.37 centavos per kilowatt-hour (kWh) to P12.9508 kWh last month from P13.1145 kWh in December, meaning households that used an average of 200 kWh paid P33 less than their monthly electricity bill.
In January 2025, Meralco charged P11.7428 per kWh.
The Department of Economy, Planning, and Development (DEPDev) said the government is enforcing plans to control price pressures from the energy sector. They include improving the Department of Energy’s Total Metering Program by enforcing time-limited local permits, simplifying utility documentation requirements and increasing consumer incentives.
“This program allows consumers to install suitable renewable energy systems and send the remaining electricity to the grid, helping to reduce electricity costs and support the energy transition,” DEPDev said in a statement.
Mr. Mapa also noted that liquefied petroleum gas (LPG) added price pressure, as inflation was -2.8% in January from 5.1% in December.
In January, Petron Corp. raised LPG prices by P2.18 per kilogram (kg), while Solane set P2.18-per-kg.
This means that the average price of an 11 kg domestic LPG tank went from P820 to P1,120 last month, based on data from the Department of Energy.
Meanwhile, Mr. Mapa noted that landlords tend to start making rent adjustments in the first month of the year, which may have increased rent inflation in January.
“What we are learning is that January marks the beginning of the annual hiring changes,” he said in mixed Filipino and English, adding that there could be another increase in February and March.
POWER OUTAGE OF FAST FOOD RESTAURANTS
Meanwhile, faster electricity and rent prices boosted restaurant and lodging inflation to 4% in January from 2.4% in December. This was the fastest clip since 4.1% in September 2024.
In restaurants, cafes and the like, inflation rose to 4.1% in January, from 2.6% in December.
“The price of electricity also increases because, of course, you use electricity – maybe the rent, as the rents in the areas also increase, maybe the wages. So, these are the factors that contribute to that increase,” said Mr.
However, the slow inflation of the food and non-alcoholic beverages index reduced overall price pressures in January.
Food inflation eased to 1.1% from 1.4% in December, as better weather conditions boosted local agricultural production and general prices.
In particular, the inflation of vegetables, pulses, plantains, cooking bananas and pulses came down sharply to 3.3% from 11.6% last month.
“The floods are over now. Therefore, our provinces are producing again, especially in Luzon,” said Mr. Mapa, adding that the prices of certain vegetables are normal.
The PSA also saw a slight increase in the price of corn, meat and other offal, fish and seafood, and oils and fats.
PRICES OF RICE
On the other hand, the decline in rice prices decreased to -8.5% per year in January thereafter nine straight months of double-digit dips.
This marked a mild decline from 12.3% in December and was the slowest decline in rice prices in 10 months or from 7.7% in March 2025.
In January, the average price of local milled rice decreased by 10.28% to P43.29 per kilo from P48.25 per kilo last year but increased by 4.34% from P41.49 in December, according to the PSA.
Milled rice was also cheaper by 7.55% year-on-year at P50.05 per kilo from P54.14 but increased by 3.73% from P48.25 in December. On the other hand, the cost of special rice decreased by 5.29% year-on-year to P59.79 per kilo from P63.13 but increased by 2.42% month-on-month from P58.38.
The Philippines reopened its rice import market on Jan. 1 after the government imposed a four-month ban in September.
PSA data showed that inflation, which excludes volatile food and fuel prices, also rose to 2.8% in January, from 2.6% in the same month last year and 2.4% in December.
January saw the fastest inflation in a year and a half or since the print of 2.9% in July 2024.
Meanwhile, the inflation rate in the National Capital Region (NCR) decreased nationally, falling to 1.9% in January, from 2.3% in December and 2.8% in the previous year.
However, inflation in areas outside the NCR matched the national CPI at 2%, up from 1.7% last month. Year-on-year, it is down from 2.9%.
Inflation for households in the bottom 30 percent of incomes also accelerated to 1.6% in January from 1.1% in December. However, it is down from 2.4% posted last year.
Meanwhile, Mr. Mapa noted that the PSA is working to reduce the CPI to 2025 from the current 2018, with inflation beginning in 2025. report likely to be released in January 2027.
“Currently, technical staff are identifying weight adjustments using our 2025 Household Income and Expenditure survey, as it is. [ongoing],” he added.
THE QUIET WAY
With inflation starting to pick up, the central bank may now be more cautious about easing monetary policy.
Nevertheless, analysts see the sixth consecutive cut in the revision of the Financial Board in Feb. 19 remains on the table, especially amid ongoing growth problems.
“Overall, we think the January CPI has paved the way for more deflation,” HSBC Global Investment Research ASEAN economist Aris D. Dacanay said in an emailed analysis. “While growth has slowed to the slowest pace since 2011, despite the COVID-19 pandemic, inflation has never been as serious as it has been for the past two months.”
“Considering these risks, we still think the BSP will cut its policy rate in February, as we expect growth concerns to outweigh inflation when we discuss monetary policy,” he added.
Mr. Dacanay noted that the government’s move to increase the level of rice importation and muted demand could have an impact on commodity prices in the coming months.
On the other hand, Chinabank Research projects that the underlying results will suppress inflation to the end of the central bank’s target for the second quarter.
Food supply problems, high prices and high transport costs and low wages can bring price pressure, it added.
“Nonetheless, with inflation expected to moderate between targets this year, we think the BSP has room to further cut interest rates, possibly at its February 19 meeting, to help support the sluggish economy,” Chinabank Research said in a note.
In 2026, the BSP expects inflation to be 3.2%.
“Inflation conditions continue to be positive while inflation is expected,” the central bank said in a statement. “In 2026 and 2027, inflation is expected to reach the 3% ± 1 ppt target.”
The comparative policy rate stands over three years below 4.5%, after the Monetary Board brought a total of 200 points. (bps) in cuts since it began its easing cycle in August 2024.
“On balance, the Monetary Board sees a cycle of monetary policy easing as it is nearing its end. Any further easing may be limited and guided by incoming data,” he said.
BSP Governor Eli M. Remolona, Jr. He previously said that they could help stimulate the need to develop the economy by reducing the cost of borrowing, if such a move would ensure that inflation would remain low.
He left the door open to a 25-bp cut this month after fourth-quarter growth proved weaker than expected but noted that inflation would be a key consideration.
However, the Monetary Board maintains that they are moving towards the end of the current cycle of easing.
