Inflation settles at five-year low of 0.9%

A sustained drop in rice prices has significantly eased the cost of living for low-income households in the Philippines, with inflation for the bottom 30% income group falling to -0.8% in July, the Department of Economy, Planning, and Development (DEPDev) said on Tuesday.

This marks a sharp reversal from the 5.8% inflation rate this group experienced in the same month last year.

The Philippine Statistics Authority (PSA) also reported on Tuesday that the country's overall inflation rate eased to 0.9% in July from 1.4% in June, the lowest since October 2019. The year-to-date average inflation rate is now 1.7%, reflecting sustained price stability.

The faster decline in inflation for low-income households was primarily driven by the food and non-alcoholic beverages index, which recorded an inflation rate of -3.0% in July, a further drop from -2.2% in June. Key contributors included rice (-17.8%), corn (-17.7%), and vegetables and tubers (-1.9%).

For all households, continued deflation in rice (-15.9%) and vegetables (-4.7%), along with slower inflation for most other food commodities, contributed to overall food deflation. The rice price index, which has been declining year-on-year since January, continued its downward trend for the 13th consecutive month, dropping to 99.4 in July from a high of 118.5 in June 2024.

Non-food inflation was also subdued, supported by deflation in the operation of personal transport (-7.3%), as global oil prices remained muted. There was also a significant deceleration in electricity inflation (1.3% from 7.4%) due to lower generation charges.

DEPDev Secretary Arsenio M. Balisacan welcomed the continued moderation in inflation.

"The sustained drop in rice prices and the easing of inflation for low-income households are clear signs that our interventions are working," he said. "This not only helps Filipinos preserve the value of their peso but also builds confidence for businesses and consumers to plan ahead."

"While we expect the overall inflation for 2025 to remain favorable and supportive of domestic demand, we remain vigilant against external risks, including global policy shifts and geopolitical tensions," he added.

Despite recent weather disturbances, the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) forecasts a relatively favorable climate outlook. Nine to 17 tropical cyclones are expected between August and January 2026, but the prevailing ENSO-neutral condition is likely to support stable agricultural production.

To facilitate recovery in areas affected by recent tropical storms, the Department of Agriculture (DA) has allocated 495.4 million Philippine pesos ($8.4 million) worth of agricultural inputs, including rice, corn, and vegetable seeds, for nationwide distribution.

The DA is also prepared to activate its Quick Response Fund and offer interest-free loans of up to 25,000 pesos through the Survival and Recovery (SURE) Loan Program, with a three-year repayment period. The Philippine Crop Insurance Corporation is also expediting indemnity payments to affected farmers and fisherfolk.

In addition, the DA expects the arrival of 150,000 additional AVAC live vaccine doses for African Swine Fever (ASF) from Vietnam this month. The initial batch has already been distributed nationwide, and strengthened border controls have helped reduce ASF-affected villages to 28 as of July 11, down from 534 at the peak of the outbreak in October 2024.

Targeted beneficiaries of the Department of Social Welfare and Development’s Walang Gutom Program can also purchase rice at 20 pesos per kilo through the Kadiwa ng Pangulo initiative.

"Statistical improvements are meaningful only when they translate into better lives for ordinary Filipinos," Balisacan said. "Thus, we are committed to sustaining this positive momentum and ensuring that protecting the purchasing power of Filipinos remains our top priority."