Finance Secretary Ralph Recto highlighted that the low and steady inflation rate of 2.9 percent in January gives the Bangko Sentral ng Pilipinas (BSP) room to cut its policy interest rates, which in turn could boost household spending and economic growth.

The headline inflation rate remained unchanged from last month and is comfortably within the government’s target band of 2 percent to 4 percent.

Core inflation, which excludes selected volatile food and energy items, also eased to 2.6 percent in January from 2.8 percent the prior month.

“This is a strong indicator of the government’s commitment to keeping prices stable and signals that the BSP has more flexibility to further reduce interest rates. Lower interest rates mean cheaper borrowing costs for our consumers and businesses. This will provide greater purchasing power for our people and stronger momentum for investments and growth,” said Recto.

Due to the lingering effects of last year’s consecutive typhoons, food inflation slightly accelerated to 3.8 percent from 3.4 percent registered in December 2024. Higher vegetable prices were among the main contributors to the increase.

Nevertheless, it was offset by lower inflation rates in housing, water, electricity, gas, and other fuels (2.2 percent from 2.9 percent), and restaurants and accommodation services (3.2 percent from 3.8 percent).

Rice inflation also showed a significant improvement, registering a disinflation of -2.4 percent . This was down from 0.8 percent in December 2024, and a sharp decline from 22.6 percent for the same month a year ago.

Both the inflation rate and price levels indicate a steady drop in rice prices since July 2024, with only a slight uptick in October. The decline was faster in January, particularly for imported rice in the National Capital Region (NCR), which posted an average double-digit decrease of 12.5 percent.

Non-food inflation remains relatively low at 2.2 percent in January from 2.6 percent in December 2024. This was largely due to slower price increases in rentals, water supply, liquified petroleum gas, as well as restaurants and accommodation services. DOF Information Management Service