Annual consumer price increases slowed further to 1.8 percent in March 2025, down from 2.1 percent in February, as food price hikes eased mainly due to lower rice prices, the Philippine Statistics Authority (PSA) reported.

March inflation was the slowest in nearly five years, or since May 2020—at the height of the most stringent lockdowns at the onset of the Covid-19 pandemic—when the headline rate clocked in at 1.6 percent.

This reversed price movements seen in March 2024, when inflation hit 3.7 percent, which was among the highest monthly rates last year.

In the first three months of the year, the average inflation rate stood at 2.2 percent, falling comfortably within the government’s two- to four-percent target band of manageable price increases conducive to economic growth.

This first-quarter average was also lower than the 3.3 percent in the same quarter of 2024.

According to the PSA, the decline in overall inflation in March 2025 was mainly driven by the slower annual increase in food and non-alcoholic beverage prices, which eased to 2.2 percent from 2.6 percent in February.

Food inflation continued to ease in March 2025, slowing to 2.3 percent from 2.6 percent in February. This development was mainly due to the steeper 7.7-percent year-on-year drop in rice prices, compared to the previous month’s 4.9-percent contraction.

Claire Dennis S. Mapa, PSA undersecretary and national statistician, said during an April 4 press briefing that the lowest rice price deflation was recorded in March 2020, when rice prices dropped by 8.4 percent.

This was followed by a slight slowdown in inflation of meat and other meat products (8.2 percent, from 8.8 percent), as well as vegetables and similar produce (6.9 percent, from 7.1 percent).

The PSA added that the downtrend in inflation was also driven by the steeper decline in transport costs compared to the previous month.

In contrast, slight increases in inflation were recorded for alcoholic beverages and tobacco, housing, and utilities, as well as information and communication, compared to the previous month.

Core inflation, which excludes certain food and energy items, also eased to 2.2 percent in March 2025, from 2.4 percent in February. It was notably lower than the 3.4 percent recorded in the same month a year earlier.

Notably, inflation for the country’s poorest, or bottom 30-percent income, households was even slower at 1.1 percent, down from 1.5 percent in February. March inflation for poor households was the lowest in over five years.

This low figure starkly contrasts with the 4.6-percent inflation seen in the previous year. This inflation decline for the bottom 30-percent income households in March was mainly due to the slower annual growth in food and non-alcoholic beverages.

National Socioeconomic Planner Arsenio M. Balisacan said the continued inflation slowdown reflects the “effectiveness” of the government’s proactive measures “to stabilize prices and protect the purchasing power of Filipino households.”

“While the inflation rate continues to ease and remain within the target range, we commit to monitoring risks and shocks, particularly on anticipated electricity rate hikes and higher prices of fish and meat, and addressing them through timely and targeted interventions,” Balisacan further said.

Likewise, the state planning agency National Economic and Development Authority (NEDA) said in an April 4 statement that it will closely monitor the impact of United States (US) President Donald Trump’s recent move to impose a 17-percent reciprocal tariff on Philippine exports.

“With or without the trade policy changes in the US, maintaining sound macroeconomic fundamentals, improving the ease of doing business, maximizing existing trade agreements, and forging new partnerships are still the most important strategies we can pursue to ensure that we protect the purchasing power of Filipinos and promote rapid, sustained, and inclusive growth,” Balisacan said.

Downward inflation augurs well to the Bangko Sentral ng Pilipinas' (BSP) plan to lower key interest rates.

In an April 3 report, Dutch financial giant ING forecasted the BSP to cut the policy rate by 25 basis points (bps) to 5.5 percent, from 5.75 percent at present, on April 10.

In all, "we still foresee three additional rate cuts of 25 bps each," ING said, citing downward inflation at the start of the year.

"The BSP's decision to pause its rate-cutting cycle in February was unexpected. We believe this was primarily due to 'unusual' global uncertainties rather than domestic fundamentals. The timing of the rate cuts is expected to be more gradual and measured than previously anticipated, influenced in part by the Federal Reserve's actions," the report read.