The Philippines’ inflation rate MoM for December 2025 rose by 0.20%, doubling November’s 0.10% increase. This acceleration comes after a flat October and marks a return to moderate price growth. The 12-month average MoM inflation stands near 0.10%, indicating the current print is above the recent trend. This uptick reflects ongoing supply-side pressures and recovering demand in the post-pandemic economy.

Drivers this month

• Food prices contributed approximately 0.08 percentage points (pp), driven by higher vegetable and meat costs.
• Energy inflation added 0.05 pp, reflecting global oil price volatility.
• Services inflation rose by 0.04 pp, linked to transport and housing costs.
• Core inflation components excluding volatile food and energy added 0.03 pp, signaling broadening price pressures.

Policy pulse

The Bangko Sentral ng Pilipinas (BSP) targets a 2-4% inflation band. The current MoM rise, if annualized, suggests a YoY inflation rate near the upper target limit. The BSP’s recent cautious stance on interest rates aligns with this moderate inflation uptick, balancing growth support with price stability.

Market lens

Immediate reaction: The Philippine peso (PHP) strengthened marginally by 0.10% against the USD in the first hour after the release, reflecting market confidence in the BSP’s inflation management. Two-year government bond yields rose by 5 basis points, signaling modest inflation risk repricing. Breakeven inflation rates edged up 3 basis points, consistent with the data.

The inflation rate MoM is a key macroeconomic indicator reflecting short-term price changes. The 0.20% increase in December 2025 compares with a 0.10% rise in November and a flat reading in October, showing a reacceleration after a brief pause. The 12-month average MoM inflation is approximately 0.10%, indicating that December’s figure is twice the recent average pace.

Historical comparisons

• December 2024 recorded a 0.15% MoM inflation, slightly lower than this year’s 0.20%.
• The peak monthly inflation in 2023 was 0.35% in June, driven by energy shocks.
• During the 2020 pandemic downturn, MoM inflation averaged near zero or negative, contrasting sharply with the current recovery phase.

Monetary policy & financial conditions

The BSP has maintained a cautious monetary stance, keeping policy rates steady since mid-2025. The recent inflation uptick may prompt a reassessment if the trend continues. Financial conditions remain accommodative, with stable credit growth and manageable bond yields.

Fiscal policy & government budget

Government spending remains expansionary, supporting infrastructure and social programs. The fiscal deficit is projected at 3.50% of GDP for 2025, slightly above the historical average but sustainable given low borrowing costs. This fiscal stance supports demand but may add inflationary pressures if unchecked.

What This Chart Tells Us

Market lens

Immediate reaction: PHP/USD exchange rates appreciated slightly, while 2-year government bond yields increased by 5 basis points. Breakeven inflation rates rose modestly, reflecting market anticipation of sustained inflation. These moves indicate confidence in the BSP’s ability to manage inflation without derailing growth.

Looking ahead, inflation in the Philippines faces a mix of upside and downside risks. The baseline scenario projects MoM inflation averaging 0.15-0.20% over the next six months, consistent with BSP targets. However, external shocks and domestic demand shifts could alter this path.

Bullish scenario (20% probability)

• Global commodity prices ease, reducing energy and food inflation.
• Supply chain improvements accelerate, easing cost pressures.
• BSP maintains accommodative policy, supporting growth without inflation spikes.

Base scenario (60% probability)

• Inflation remains near current levels, with moderate monthly increases around 0.15-0.20%.
• Monetary policy remains steady, balancing inflation and growth.
• Fiscal policy continues to support demand moderately.

Bearish scenario (20% probability)

• External shocks (e.g., geopolitical tensions) push energy prices higher.
• Domestic demand surges, causing overheating and inflation above 0.30% MoM.
• BSP forced to tighten policy aggressively, risking growth slowdown.

The December 2025 inflation rate MoM of 0.20% signals a moderate but clear rise in price pressures in the Philippines. This uptick, above the recent average, reflects a recovering economy facing supply and demand shifts. The BSP’s cautious monetary stance and the government’s fiscal support will be key to managing inflation within target. Market reactions suggest confidence but also vigilance. The balance of risks points to a steady inflation path, with potential volatility from external shocks. Policymakers and investors should monitor these dynamics closely as 2026 unfolds.

Key Markets Likely to React to Inflation Rate MoM

The Philippines’ inflation data typically influences currency, bond, and equity markets. Key symbols historically sensitive to inflation shifts include the Philippine peso (PHPUSD), local government bonds, and select equities tied to consumer spending and energy prices. Monitoring these can provide early signals of market sentiment and policy expectations.

• PHPUSD – The peso’s exchange rate reacts to inflation-driven monetary policy changes.
• SM – A major retail conglomerate sensitive to consumer price changes.
• AC – Energy sector stock impacted by inflation in fuel prices.
• BTCUSD – Bitcoin often reacts to inflation expectations and monetary policy shifts.
• USDPHP – The inverse of PHPUSD, important for importers and exporters.

Inflation Rate MoM vs. PHPUSD Since 2020

Since 2020, the Philippine peso’s exchange rate (PHPUSD) has shown a moderate inverse correlation with monthly inflation rates. Periods of rising inflation often coincide with peso depreciation due to expectations of monetary tightening. The chart below highlights key episodes where inflation spikes preceded peso weakness, notably during mid-2023 energy shocks and early 2024 supply disruptions. This relationship underscores the peso’s sensitivity to inflation dynamics and BSP policy responses.

FAQs

What is the latest inflation rate MoM for the Philippines?

The latest inflation rate MoM for the Philippines is 0.20% for December 2025, doubling November’s 0.10% increase.

How does the current inflation rate compare historically?

December 2025’s 0.20% MoM inflation is above the 12-month average of 0.10% and higher than December 2024’s 0.15%, indicating rising price pressures.

What are the main risks to inflation going forward?

Upside risks include external commodity shocks and domestic demand surges; downside risks involve easing supply constraints and stable global prices.

Takeaway: The Philippines’ December 2025 inflation rate MoM of 0.20% signals a cautious return of price pressures, requiring balanced policy to sustain growth and price stability.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.