Government Targets Hit 

In January 2026, it was reported that the country posted an all-time low inflation rate last year, with an average inflation rate of 1.7% across all households in the Philippines. Acting Executive Secretary Ralph Recto stated back in July 2025, when inflation levels were at a 6-year low of 0.9%, that the low inflation rates provided “a relief to the poorest Filipino families” (Department of Finance, 2025). Several factors contributed to this decline in inflation levels, including tighter monetary policy and government measures to control rising food costs. 

Additionally, the government succeeded in reaching the target job creation and poverty reduction set for the year, posting a 4.7% unemployment rate and a 13.6% underemployment rate in 2025, compared to the 10.3% and 16.2% in 2020, respectively (Inquirer, 2026). These levels led to a positive outlook for the Philippines based on the Philippine government's plans. 

Despite these macroeconomic indicators pointing towards positive outcomes for the Philippine economy, these levels that were reflected in the papers did not translate into Filipino families’ experience. 

Stable Inflation, Unstable Essentials

Despite what Philippine officials are saying, slower inflation doesn’t mean lower prices across goods. A slower inflation rate means prices are rising at a slower rate compared to before. This clarification is important when discussing prices and inflation because when prices are already high, a low inflation rate can ease the burden but still decreases the purchasing power of Filipinos, making it harder for Filipinos to catch up with daily costs.  If a kilo of rice is priced at ₱45, a low inflation rate of 2% would help Filipinos, but with the price already being high, Filipinos would still struggle to keep up with costs if it were to go higher. 

This is clearer when examining the CPI in July 2025, which was 5.2% higher than in 2023 when inflation was at a high of 8.7% under the new Marcos Administration (IBON Foundation, 2025). With January 2023 CPI at 121.4 and July 2025 CPI at 127.8. This means to say that despite inflation being stable across 2025, prices are still higher compared to 2023. This is perfectly displayed when comparing rice prices from 2023 to 2025, with the price for Regular Milled Rice hovering around ₱40.5 and now being around ₱44-₱46, and the price of Well-Milled Rice going from ₱44.5 to ₱50-₱51. Rice prices declined from 2024, with a nine-month double-digit dip in 2025, but prices still have not fallen to 2023 “pre-crisis” levels when inflation was reportedly at its highest. Other prices of food have also seen upticks in 2025. Garlic shot up to ₱156 from ₱110, pechay has gone up to ₱109 from ₱81, and kangkong has gone from ₱74 to ₱85 during mid-2025. Utilities and transport services have also been rising as well, with Meralco rates at ₱10.9-₱11.5 per kWh, and now at ₱13.2 per kWh. Public transport drivers and operators have petitioned to raise the price of their services last November 2025, with traditional jeepneys drivers seeking to raise their prices to ₱15 from ₱13, modern jeepneys going from ₱15 to ₱17, and P2P operators seeking to raise their prices by 30%, citing increasing fuel and maintenance costs that have been slashing the earnings of drivers. Despite this proposal being rejected, it shows that rising prices are affecting the Filipino commuter, and the future rates for fares will continue to seek higher rates. 

These essentials are non-negotiable for Filipino families, as most do not have a cheaper substitute; when prices of these necessities increase, Filipinos can’t turn to other alternatives. When electricity prices rise, there are no other alternatives Filipinos can use. Similarly, public transportation is already the cheaper option, so when fares increase, Filipinos are left with no other choice. When staples such as rice increase, Filipinos are forced to skip meals just to make ends meet. When you add all these variables together, it leaves Filipinos barely scraping by until the next paycheck is received. 

Old Wages with New Costs 

Many economists point out that a stable rate of inflation can actually be good for the economy, as it stimulates demand and encourages spending, allowing for money to circulate throughout the economy. However, the problem arises when inflation goes up, household income also needs to increase so as not to decrease the purchasing power of households. This has been the case in the Philippines, with 2023 inflation skyrocketing, incomes were left stagnant. With continued increases in inflation, wages will always be trying to catch up. Even if the minimum wage increases for the formal sectors, there are still many Filipinos who don’t fit under this category, as they may be in informal and low-paying jobs. Data indicate that around 7 out of 10 Filipinos are in informal or insecure jobs (IBON Foundation, 2025). It has even been noted that under the Marcos Administration, wage adjustments failed to restore the real value of minimum wages to 1980s levels, except in the National Capital Region. (IBON Foundation, 2025). In simpler terms, the formal minimum wage of today is lower than it was over three decades ago after accounting for inflation. 

Recent Social Weather Station surveys found that 51% of Filipino families rate themselves as poor; this number has been the same for the past few years, with around half of families considering themselves poor even if they don’t necessarily fall below the poverty line (Inquirer, 2026). Despite statistically being considered “not poor,” many of these households are one health shock away from falling below the poverty line. With Filipinos now classifying the middle class as the “new poor.”  Hovering just above the poverty line hurts the middle class, since they don’t qualify for government aid, which is typically offered only to low-income households. With the addition that people in the low-income bracket don’t typically pay taxes, middle-class families are the ones most affected by price hikes and stagnant wages (Chanco, 2026). 

The Philippine government recognizes this, as for the first time in 36 years, policymakers are seriously considering a legislated minimum wage hike as multiple labor groups rally for increases in wages throughout the years.  The two key proposals for this wage hike are House Bill (HB) No. 11376, otherwise known as the “Wage Hike for Minimum Wage Workers Act,” which seeks a ₱200 daily increase for all private-sector workers regardless of region, industry, or employment status. While Senate Bill (SB) No. 2534 proposes a lower ₱100 increase. These two bills cover both agricultural and non-agricultural workers, probationary and contractual workers as well. However, this bill has yet to be passed due to the conflicting views of the House and the Senate on how much wages should be increased. With no bicameral conference occurring in the 19th Congress, the bill must be refiled and passed again at the start of the 20th Congress and will require Presidential approval to become law. As these proposals continue to be delayed, inflation would continue to rise. Once this bill does get passed, the effectiveness might not be enough to help or only provide partial relief. 

Inflation Outlook for 2026

Recently, January 2026 data has displayed a 2% inflation rate, a 0.2% increase from December 2025 inflation numbers. Despite the incremental increase, the underlying contributor to the uptick is alarming, with housing, electricity, gas, and other fuels inflation going up by 3.3% from December’s 2.5%, which marks the highest in the past 17 months. In addition, Restaurants and Accomodation services shot up to 4.0% from last month's 2.4% due to increasing utility costs, which were then passed onto the customers (Philstar, 2026). On the other hand, food and non-alcoholic beverages slowed down from 1.4% to 1.1% due to an increase in the supply of vegetables and meat. This marks a split in the basic needs of Filipinos due to declining food prices, but increasing utility and housing costs. This has carried over to February, with last month posting a 2.4% inflation rate for the month. With housing, water, electricity, and gas reporting a 3.5% and, the main contributor to February inflation, according to the PSA. Food and non-alcoholic beverages went from 1.1% in January to 1.8% in February (Inquirer, 2026). 

Filipino households should expect living expenses to continue to rise, with analysts and the IMF also predicting inflation will remain within the BSP’s 2%-4% target range. The BSP itself forecasts inflation to be around 3.2% in 2026, while inflation in 2027 would slightly drop to 3.0% (Business World, 2026). In recent years, stable inflation still shows some positive outlook, but inflation being “within target range” still counts as rising prices. With the addition of no clear passing of the minimum wage bills yet in 2026, spending remains pinched and tight for Filipinos for the next year. 

Policymakers recognize this and have attempted to make strides to keep prices under control, with the Department of Economy, Planning, and Development streamlining permits for investments in renewable energy to cut down on electricity prices, and the Department of Agriculture continuing to put effort into the KADIWA program to cut overall rice prices to ₱20 per kilo. However, these can only serve as cushions, as there are still structural problems with rising prices, lower productivity, and wages not proportionally increasing with inflation.  While stable inflation signals progress, it does not fully ease the burden of the already high prices. To achieve true economic development, the government must continue to work to strengthen the purchasing power of Filipinos because growth only matters if the people can feel it. 

The outbreak of the US/Israel - Iran war not only sparks safety concerns, but also economic concerns. Despite this conflict being thousands of miles away from the country, the impact felt from this war is mainly from skyrocketing fuel prices and more inflationary pressure on basic necessities. Due to the Philippines importing over 90% of its oil, “oil shocks” coming from the Middle East hurt the Philippines more than other countries. Gasoline has jumped from ₱59.10 to a staggering ₱73.50 per liter, while diesel has jumped as well, ranging from ₱78.00-₱87.44, compared to before the conflict, where prices hovered around ₱56.5-₱58.0. Additionally, more sources forecast that this won’t be the end of these price hikes for oil, with additional increases of ₱13.00/L to ₱15.00/L for gasoline and ₱16.00/L to ₱18.00/L for diesel (Manila Bulletin, 2026). These oil price hikes not only affect transportation, but also necessities such as food and electricity, as these rely on fossil fuels or petroleum gas. These increases in costs will be passed on to the buyer, increasing prices and inflation as a result. The BSP has changed its forecast for headline inflation, going up to 3.6%, while other analysts, such as BPI, forecast a 3.4% inflation rate (Philippine News Agency, 2026). Lastly, with a repatriation of Overseas Filipino Workers (OFWs), remittances are forecasted to take a 65.3% plunge from 2025 levels (Philstar, 2026). With all of these taken into account, Filipinos around the country will struggle to make ends meet if the conflict continues to persist. 

References

Cabato, L. (2026, January 27). Gov’t exceeds 2025 targets on job creation, poverty reduction – Palace. Inquirer. https://newsinfo.inquirer.net/2173925/govt-exceeds-2025-targets-on-job-creation-poverty-reduction

Chan, K. (2026, February 6). Philippine inflation accelerates to 2% in January. Business World. https://www.bworldonline.com/top-stories/2026/02/06/728808/philippine-inflation-accelerates-to-2-in-january/

Chanco, B. (2026, February 18). The abused middle class. Philstar. https://www.philstar.com/business/2026/02/18/2508657/abused-middle-class

Cordero, T. (2025, May 6). Rice prices continue contraction in April 2025. GMA News. https://www.gmanetwork.com/news/money/economy/945098/rice-prices-continue-contraction-in-april-2025/story/

De Leon, N. (2026, March 6). Philippine inflation hits 13-month high of 2.4% in February. Inquirer.https://business.inquirer.net/577609/breaking-philippine-inflation-rises-to-2-4-in-february

Department of Finance. (2025, August 5). Recto: Six-year low inflation of 0.9% in July brings biggest relief to poorest Filipino families with lower food prices. Department of Finance. https://www.dof.gov.ph/recto-six-year-low-inflation-of-0-9-in-july-brings-biggest-relief-to-poorest-filipino-families-with-lower-food-prices/

Desiderio, L. (2026, March 11). Protracted ME conflict to trim GDP growth – DEPDev. Philstar. https://www.philstar.com/business/2026/03/11/2513356/protracted-me-conflict-trim-gdp-growth-depdev

Galang, G. (2026, March 11). ₱100/liter near? Fuel prices keep rising for second straight week. Manila Bulletin. https://mb.com.ph/2026/03/11/100liter-near-fuel-prices-keep-rising-for-second-straight-week

Gomez C. (2025, May 28). From Market Drop to Market Aid: Tracking Rice Market Trends. PCAARRD’s ISP-IS. https://ispweb.pcaarrd.dost.gov.ph/from-market-drop-to-market-aid-tracking-rice-market-trends/

Gonzales, A. (2026, March 5). Gov't to employ measures to manage inflation amid rising oil prices. Philippine News Agency. https://www.pna.gov.ph/articles/1270359

Insider PH. (2025, November 10). Meralco hikes November electricity rate by P0.1520 per kWh. Insider PH https://insiderph.com/meralco-hikes-november-electricity-rate-by-p01520-per-kwh#:~:text=,4702%20per%20kWh

Mangaluz, J. (2026, February 5). Inflation picks up 2.0% in January 2026. Philstar. https://www.philstar.com/business/2026/02/05/2505952/inflation-picks-20-january-2026

Marasigan, L. (2025, November 12). Jeepney, bus, taxi fares may rise as LTFRB nears decision. Business Mirror. https://businessmirror.com.ph/2025/11/12/jeepney-bus-taxi-fares-may-rise-as-ltfrb-nears-decision/

Meralco. (2024 December). December 2024 Rates Updates. Meralco. https://company.meralco.com.ph/news-and-advisories/december-2024-rates-updates

Meralco. (2025 December). Lower Rates this December 2025. Meralco. https://company.meralco.com.ph/news-and-advisories/lower-rates-december-2025

Sampang, D. (2026, January 9). 51% of Filipino families still consider themselves poor – SWS. Inquirer. https://newsinfo.inquirer.net/2165996/51-of-filipino-families-still-consider-themselves-poor-sws

Watkins, J. (2026, January 23). Minimum Wage in The Philippines: Rates, Trends & Compliance. Payroll. https://www.playroll.com/minimum-wage/the-philippines