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09/27/2025

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09/27/2025
LAWIN.news

August inflation in Philippines peaks at 1.5% due to escalating vegetable rices

by Mae De Vera, LAWIN.news September 7, 2025
written by Mae De Vera, LAWIN.news September 7, 2025
Photo Credit: AFP
39

In the Philippines, inflation accelerated in August to its fastest rate in five months, driven by a significant rise in food costs, especially vegetables, following heavy monsoon rains and flooding that damaged crops.

Despite this increase, overall price growth remained moderate, allowing the central bank the potential to lower borrowing costs further if supported by other economic indicators.

The consumer price index rose 1.5 percent compared to a year ago, up from July’s 0.9-percent increase, as reported by the Philippine Statistics Authority on Friday.

This represents the sharpest rise since March’s 1.8 percent increase.

The August figure also surpassed market expectations, exceeding the 1.2 percent median forecast of economists surveyed by the Inquirer last week. Nonetheless, it fell within the Bangko Sentral ng Pilipinas’ (BSP) predicted range of 1 to 1.8 percent.

Broadly, this marked the sixth consecutive month that inflation was below the government’s official target of 2 to 4 percent.

Data showed that vegetable prices surged by 10 percent in August, marking the fastest growth since January’s 21.1 percent jump. In Metro Manila, vegetable prices increased by 26.5 percent, far outpacing the 6.9-percent rise in areas outside the capital. National Statistician Claire Dennis Mapa attributed this spike to the effects of heavy rains in late July, which continued into August.

The rise in vegetable prices countered the more rapid decrease in rice prices, which dropped by a record 17 percent. Consequently, the overall food index increased by 0.9 percent, reversing a 0.2-percent contraction in July.

“While inflation remains generally manageable, the recent data underscores how adverse weather can directly influence prices,” stated Economy, Planning and Development Secretary Arsenio Balisacan.

The period of mild price gains may affect the central bank’s future policy decisions. In August, the BSP reduced its benchmark rate by a quarter point to 5 percent—a level Governor Eli Remolona Jr. described as “Goldilocks,” optimal for not overstimulating inflation or hindering economic growth.

Analysts now believe the BSP’s rate-easing cycle is nearing its end. However, Remolona has left the door open, indicating the Monetary Board might consider another rate cut in October or December if demand weakens.

HSBC economist Aris Dacanay stated that there is still room for another rate cut this year.

“The unexpected increase raises the possibility of the BSP maintaining control over monetary policy,” he said. “But it doesn’t entirely rule out the potential for a rate cut.”

Analysts at Chinabank Research suggested that inflation might continue to rise due to base effects and price pressures from food and energy. However, they expect overall price growth to remain low.

“This could allow for another BSP interest rate cut before year-end,” they noted.

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Mae De Vera, LAWIN.news

Mae De Vera is a passionate advocate, creative professional, and entrepreneur. A graduate of Political Science from Saint Louis University and a law student of Arellano University, Mae is dedicated to empowering marginalized communities through outreach programs and advocacy. With a background in digital artwork, event flyer design, ESL teaching, and business management, Mae brings a versatile skill set to her endeavors. She also embraces her love for nature through farming, integrating sustainability into her life. Mae’s leadership experience as a consistent school student leader reflects her commitment to making a difference. Today, she combines her creativity, advocacy, and entrepreneurial spirit to create impactful stories and initiatives that inspire change. Disclaimer: The views and beliefs expressed by the author do not necessarily represent those of LAWIN.news, its management, editorial board, or staff.

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