Philippines Producer Price Index YoY: December 2025 Release and Macro Outlook
Table of Contents
The Philippines’ Producer Price Index (PPI) YoY for December 2025 registered a 0.30% increase, significantly below the consensus estimate of 1.30% and down from 0.80% in October 2025, according to the latest data from the Sigmanomics database. This marks a notable deceleration in producer-level inflation, reflecting subdued cost pressures across key sectors. The PPI’s trajectory over the past year has been volatile, with a peak of 1.01% in October and a trough of -0.27% in August, indicating fluctuating input costs amid shifting supply-demand balances.
Drivers this month
- Energy prices stabilized, contributing 0.05 pp to the PPI growth.
- Food processing costs edged down, subtracting -0.10 pp.
- Manufacturing input costs remained flat, neutral impact.
- Transportation and logistics saw slight cost easing, -0.02 pp.
Policy pulse
The current PPI reading sits well below the Bangko Sentral ng Pilipinas’ (BSP) inflation target corridor of 2-4%, suggesting easing upstream inflation pressures. This may reduce urgency for aggressive monetary tightening, supporting a cautious stance in upcoming policy meetings. However, the BSP remains vigilant given external inflation risks and domestic demand recovery.
Market lens
Immediate reaction: The Philippine peso (PHPUSD) strengthened 0.15% within the first hour post-release, reflecting relief over lower inflation pressures. The 2-year government bond yield dipped 5 basis points, signaling reduced inflation risk premium. Breakeven inflation rates also softened slightly.
The PPI YoY trend complements other core macroeconomic indicators in the Philippines. Consumer Price Index (CPI) inflation remains elevated at 3.80% YoY as of November 2025, while wage growth has moderated to 3.20%. Industrial production growth slowed to 2.10% YoY, reflecting cautious business investment amid global uncertainties. The unemployment rate held steady at 5.40%, indicating stable labor market conditions.
Monetary policy & financial conditions
The BSP’s policy rate currently stands at 5.25%, unchanged since September 2025. The softer PPI print supports a wait-and-see approach, with the central bank signaling data dependency. Credit growth remains moderate at 6.50% YoY, while liquidity conditions are ample. The peso’s recent appreciation aids in containing imported inflation, a key channel for producer costs.
Fiscal policy & government budget
Fiscal policy remains expansionary, with the government targeting a 3.50% of GDP deficit in 2025. Infrastructure spending continues to boost demand, but rising debt servicing costs pose medium-term risks. The subdued PPI may ease pressure on government procurement costs, potentially improving budget execution efficiency.
Market lens
Immediate reaction: The PHPUSD currency pair appreciated 0.15% post-release, reflecting market optimism on inflation control. The 2-year government bond yield declined by 5 basis points, and breakeven inflation rates softened by 10 basis points, signaling reduced inflation expectations.
This chart highlights a clear trend of easing producer price inflation after a mid-year spike. The downward movement from October’s 1.01% to December’s 0.30% signals reduced cost pressures, which could alleviate input cost inflation for businesses and support stable consumer prices ahead.
Looking ahead, the PPI trajectory will be shaped by several factors. Bullish scenario (30% probability): Global commodity prices stabilize or decline, domestic demand growth slows, and supply chains normalize, pushing PPI below 0.20% by mid-2026. Base scenario (50% probability): PPI hovers around 0.30-0.60%, reflecting moderate inflation pressures consistent with BSP targets. Bearish scenario (20% probability): External shocks such as renewed geopolitical tensions or commodity price spikes push PPI above 1.00%, risking cost-push inflation resurgence.
External shocks & geopolitical risks
Ongoing geopolitical tensions in East Asia and global energy market volatility remain key downside risks. Any supply disruptions could quickly reverse the easing trend in producer prices, impacting inflation and monetary policy decisions.
Structural & long-run trends
Structural factors such as gradual industrial upgrading, increased automation, and improved supply chain resilience may dampen long-term producer price volatility. However, demographic pressures and urbanization could sustain demand-driven inflationary forces.
The December 2025 PPI YoY reading of 0.30% signals a notable easing in producer inflation pressures in the Philippines. This development supports a cautiously optimistic macro outlook, with monetary policy likely to remain accommodative but data-dependent. External risks and fiscal dynamics warrant close monitoring, as they could influence inflation trajectories and financial market sentiment. Overall, the PPI trend suggests a window of relative price stability at the production level, which could translate into moderated consumer inflation and steady economic growth in 2026.
Key Markets Likely to React to Producer Price Index YoY
The Producer Price Index YoY is a critical gauge of inflationary pressures at the wholesale level, influencing currency valuations, bond yields, and equity sectors sensitive to input costs. Markets closely track this indicator for clues on inflation trends and central bank policy direction.
- PHPUSD: The Philippine peso’s exchange rate reacts to inflation data, affecting import costs and capital flows.
- PCOR: Petrochemical sector stocks are sensitive to producer price shifts, reflecting input cost changes.
- SM: Retail conglomerates’ margins are impacted by wholesale price trends.
- BTCUSD: Bitcoin often reacts to inflation expectations and monetary policy shifts.
- USDPHP: The inverse of PHPUSD, also sensitive to inflation and monetary policy.
Indicator vs. PHPUSD Since 2020
Since 2020, the Philippines’ PPI YoY and the PHPUSD exchange rate have shown a moderate inverse correlation. Periods of rising PPI often coincide with peso depreciation due to inflation concerns, while easing PPI readings support peso appreciation. This relationship underscores the PPI’s role as a leading indicator for currency market sentiment and BSP policy expectations.
FAQ
- What is the Producer Price Index YoY for the Philippines?
- The Producer Price Index YoY measures the average change in selling prices received by domestic producers for their output compared to the same month last year.
- How does the PPI affect inflation and monetary policy in the Philippines?
- PPI trends signal upstream inflation pressures that can translate into consumer inflation, influencing the Bangko Sentral ng Pilipinas’ interest rate decisions.
- What are the risks to the PPI outlook in the Philippines?
- Risks include global commodity price volatility, geopolitical tensions, supply chain disruptions, and domestic demand fluctuations.
Key takeaway: The subdued December 2025 PPI YoY reading points to easing inflation pressures at the producer level, supporting a balanced macroeconomic outlook for the Philippines heading into 2026.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The December 2025 PPI YoY of 0.30% contrasts with October’s 0.80% and the 12-month average of approximately 0.50%, indicating a downward shift in producer inflation momentum. This deceleration follows a peak of 1.01% in October and a negative reading of -0.27% in August, illustrating volatility driven by fluctuating commodity prices and supply chain adjustments.
Energy and food processing sectors contributed most to the recent moderation, while manufacturing inputs remained stable. The PPI’s trajectory suggests easing cost-push inflation pressures, which may translate into softer consumer inflation in coming months.