Inflation in the Philippines slowed to 0.9 percent in July 2025. This is the lowest rate recorded since October 2019. For many Filipinos, this means prices for goods and services are rising at a slower pace than before. Lower inflation can help households manage their budgets better, especially when it comes to food, transportation, and basic needs. Understanding this drop in inflation can help people see how economic changes affect their everyday spending.
KEY TAKEAWAYS
- The Philippine inflation rate dropped to 0.9 percent in July 2025
- This is the lowest rate since October 2019
- Rice prices fell by 15.9 percent, helping to slow overall inflation
- Utility prices like electricity and water rose more slowly than before
- Average inflation from January to July is now at 1.7 percent
- The BSP may cut interest rates again depending on upcoming data
- Core inflation, which removes food and fuel prices, rose slightly to 2.3 percent
What Is Inflation and Why Does It Matter?
Inflation measures how fast prices increase over time. If inflation is high, things like food, clothes, and fuel become more expensive more quickly. If it is low, prices still rise, but at a slower and more manageable pace. Inflation affects everyone, from families buying groceries to students paying for transport and even business owners managing costs. When the inflation rate drops, it often brings a bit of relief to people who are watching their spending closely.
What Happened in July 2025?
In July 2025, the Philippine inflation rate dropped to 0.9 percent. This is the lowest rate seen in nearly six years and came in lower than what many experts expected. In comparison, the rate was 1.4 percent in June and 1.3 percent in May. The drop shows that price increases are slowing down. For most households, this can mean some breathing room when it comes to spending on daily needs. This number also brings the year-to-date inflation average to 1.7 percent, which is below the BSP’s target range of 2 percent to 4 percent.
What Caused Prices to Slow Down?
A big reason for the drop in inflation was the large fall in rice prices. In July, rice prices went down by 15.9 percent compared to the same month last year. This followed a 14.3 percent drop in June. Since rice is a staple food for many families, this decline had a big effect on the overall inflation rate. Price increases in electricity, water, and other utilities also slowed down, helping to bring down the general cost of living.
What Is Core Inflation and Why Does It Matter?
Core inflation does not include prices for food and fuel. This makes it helpful for understanding long-term trends, since food and energy prices can change quickly from month to month. In July, core inflation rose slightly to 2.3 percent from 2.2 percent in June. While this is still a manageable number, it shows that prices in other areas are still moving. Policymakers often use core inflation to guide decisions on interest rates and future planning.
What Might Happen Next?
With inflation slowing down, the BSP may lower interest rates again later this year. Right now, the benchmark rate stands at 5.25 percent. If more signs show that inflation is staying low, the BSP could reduce rates to help support the economy. Lower rates can make it easier for people and businesses to borrow money, which may lead to more spending and investment. However, the BSP has said it will watch global events and future inflation numbers before making any final moves.
Conclusion
The drop in Philippine inflation to 0.9 percent in July is a clear sign that prices are rising more slowly. This can be good news for many Filipinos trying to manage daily expenses. Lower rice prices and slower increases in utility costs played a big role in this change. While the BSP may respond by adjusting interest rates, it will depend on how inflation and economic growth look in the months ahead. Keeping track of these numbers helps people stay informed about what might affect their household budgets and financial plans.
