July’s figure was the softest since October 2019, when inflation stood at 0.6 percent.

Ian Nicolas P. Cigaral- Philippine Daily Inquirer

MANILA – Inflation cooled to below 1 percent in July, marking its weakest pace in nearly six years, as rice prices plunged to a record low and gains in utility costs moderated.

The consumer price index (CPI) rose 0.9 percent year-on-year, slower than June’s 1.4 percent print, the Philippine Statistics Authority (PSA) reported Tuesday.

July’s figure was the softest since October 2019, when inflation stood at 0.6 percent.

It also marked the fifth consecutive month that inflation remained below the 2 to 4 percent target range of the Bangko Sentral ng Pilipinas BSP).

The latest reading came in lower than expected, beating the 1.1 percent median forecast of 13 economists polled by the Inquirer last week.

It also landed within the BSP’s 0.5 to 1.3 percent projection for the month.

Rice, vegetable prices

PSA data showed that the multiyear low inflation in July was partly driven by a sharp drop in prices of rice, which make up 9 percent of the CPI basket used to compute inflation.

The price of the staple fell by 15.9 percent—the steepest drop since records began in 1995—following lower import duties aimed at curbing retail prices.

This, along with a 4.7-percent decline in vegetable prices, caused the overall food index to dip by 0.2 percent, helping bring down headline inflation.

National Statistician Claire Dennis Mapa told reporters that last month’s severe flooding had already begun to exert upward pressure on prices of certain vegetables sold in Metro Manila.

However, he noted that the full impact of the series of storms is expected to be reflected in the August inflation data.

Mapa also noted that the impact of the plan to reinstate the 35-percent tariff on rice imports would depend on its timing and scale.

“Of course, the implication is that if the tariff is increased, there will also be an increase in retail prices,” he said.

Utility costs

It remains uncertain whether the proposal will get the support of President Marcos.

But for Economy, Planning and Development Secretary Arsenio Balisacan, the continued decline in rice prices and the easing of inflation experienced by poor households are “clear signs that our interventions are working.”

“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 said.

Another key factor behind the lower inflation in July was the slower increase in utility costs, which eased to 2.1 percent from 3.2 percent in the previous month.

Electricity prices dropped significantly to 1.3 percent from 7.4 percent, while the increase in cooking gas prices moderated to 0.7 percent from 1.9 percent.

Analysts at Chinabank Research, which correctly predicted last month’s inflation rate, said headline inflation was expected to stay below the official target of the BSP for the rest of the year.

“We expect rice inflation to remain negative for the rest of 2025 due to base effects and the sustained monthly decline in rice prices. However, upside risks include adverse weather and proposals to raise the rice tariff rate and limit rice imports,” they said.

Case for rate cut

Jun Neri, lead economist at Bank of the Philippine Islands, said an interest rate cut during BSP’s Aug. 28 meeting is “highly probable.” following the release of the benign inflation number.

“A downside surprise in GDP (gross domestic product) on Thursday would likely cement the case for a cut. However, the possibility of another rate cut after August will partly depend on what the Federal Reserve will do,” Neri said.

Published Date: August 6, 2025