Philippine consumer price growth is set to accelerate this year as the relief provided by lower rice costs fades, likely limiting the central bank’s room to further ease monetary policy, according to Oxford Economics.

Oxford Economics Economist Adam Ahmad Samdin said on Tuesday, Jan. 27, that the country’s headline inflation is projected to average 2.5 percent in 2026.

While it remains comfortably within the Bangko Sentral ng Pilipinas’ (BSP) target range of two percent to four percent, the forecast represents a pickup from the nine-year low of 1.7 percent recorded in 2025.

“In 2026, we're expecting inflation to run modestly above 2025, which should constrain the scope for further monetary loosening,” Samdin said

The Philippine Statistics Authority (PSA) earlier reported that full-year inflation in 2025 averaged 1.7 percent, the lowest in nine years or since 2016, when inflation stood at 1.3 percent. This was also significantly lower than the 3.2 percent recorded in 2024.

Inflation picked up slightly toward the end of last year, with headline inflation rising to 1.8 percent in December from 1.5 percent in November, driven mainly by higher food and non-alcoholic beverage prices.

“Favourable weather, combined with the easing of India’s earlier rice export ban in late 2024, meant food inflation in 2025 was low in economies that have higher demand for rice and rice import exposure – most notably the Philippines,” the think tank said.

“Food inflation is likely to be uneven this year,” the think tank warned, noting that the favorable base effects seen in 2025 from rice price relief have already dissipated.

It added that while easing global food and oil prices may help contain upside risks, price pressures and inflation risks have not been fully eliminated.

Data from Oxford Economics showed that food inflation in the Philippines is expected to rise to 3.3 percent in 2026, higher than last year. This compares with food inflation forecasts of 4.3 percent in Indonesia and 3.4 percent in India.

“Geopolitical risks may spark spikes, but a sustained rebound in fuel prices looks unlikely, since supply is still materially ahead of demand,” the think tank noted.

Fuel prices are expected to help offset some inflationary pressures. Oxford Economics data showed that the fuel component of the Philippines’ consumer price index (CPI) is forecast to post a negative inflation rate of -2.4 percent in 2026, following a positive inflation rate last year.

Other economies in the region expected to see negative fuel inflation include Malaysia, Singapore, China, and Thailand.

“In 2026, favourable base effects are set to be less widespread, though easing global food prices and the passthrough of weaker fuel prices into agriculture should mean the pressure won't be too significant,” the think tank added.

“It's likely that globalization and increasingly linked supply chains mean that global prices tend to move together more than they used to, especially since China's import shares have risen in economies like Vietnam, Japan, and the Philippines,” the think tank noted.