MANILA, Philippines — Inflation is projected to remain within the government’s official target range of two to three percent this year, but a report from the House of Representatives warns that rising prices continue to be a major concern for Filipino consumers.
In the report, the Congressional Policy and Budget Research Department (CPBRD) described the outlook for 2025 inflation as “cautiously optimistic,” citing forecasts ranging between 1.88 and 2.17 percent.
The range is well within the Development Budget Coordination Committee (DBCC)’s adjusted target of two to three percent for the year.
However, the CPBRD cautioned that the headline inflation may be “masking” the real cost burdens faced by households, especially as government subsidies artificially pull down rice prices while other essential goods such as meat, fish and electricity continue to rise.
“Inflation remains a major issue,” the CPBRD said, adding that even as the official figures have eased, the consumer price index remains elevated.
“A small percentage increase today still has an outsized impact on household budgets,” it said.
The sharp deceleration in rice inflation, down to -12.8 percent in May, has been largely credited to subsidy programs such as the Benteng Bigas Meron Na and Walang Gutom Program.
But the CPBRD pointed out that these price drops are not driven by improved supply or productivity.
“While government subsidies are effective in curbing short-term inflation, it can be viewed to obscure underlying inflationary pressures from other essential commodities such as meat, fish, utilities and transport,” the think tank said.
“The artificially suppressed rice prices may raise concerns about the long-term fiscal sustainability of such intervention programs,” the CPBRD said.
Other food items such as meat and dairy continue to record inflation rates above five percent, with meat prices up nearly 50 percent compared to 2019 levels.
Meanwhile, utility costs, despite temporary drops, remain vulnerable to international fuel price shocks.
The inflation outlook is further clouded by risks from the peso depreciation, global oil market volatility and geopolitical tensions, including a potential disruption in oil shipments through the Strait of Hormuz.
The CPBRD also warned that external shocks and the growing reliance on subsidies could push inflation higher in the coming months. Its model suggests inflation could hit 2.75 percent if risks materialize.
The Bangko Sentral ng Pilipinas (BSP) has maintained a dovish stance amid easing inflation, slashing policy rates
by 125 basis points since August last year. But CPBRD emphasized that managing inflation should not rely solely on monetary tools or short-term subsidies.
“Expanding government spending for the purpose of increasing subsidies may do more harm than good, particularly in the long run,” the report said, noting that public debt and tax burdens may rise to support these interventions.
The study called on policymakers to adopt a more prudent fiscal stance and prioritize structural reforms to address supply constraints in food and energy.