Soaring tomato prices main driver of 2.9% inflation in January 2025

MANILA, Philippines – The Philippines’ inflation rate was steady at 2.9% in January after three months of acceleration, the Philippine Statistics Authority said on Wednesday, February 5.

The January 2025 inflation rate is the same as the December 2024 figure, but slightly lower than the 2.8% a year ago, or in January 2024.

In 2024, the country’s inflation rate averaged at 3.2%, within the government’s target range of 2% to 4%.

By commodity, tomatoes saw the highest inflation in January 2025, surging to 155.7% from an already high 120.8% in December 2024.

Image from Philippine Statistics Authority

The Bangko Sentral ng Pilipinas (BSP) earlier projected January’s inflation print would settle within the 2.5%-3.3% range as petroleum and food prices continued to rise due to the six tropical cyclones that hit the country between October and November 2024.

“These upward price pressures are expected to be offset in part by lower prices of rice and electricity rates,” the central bank had said in a statement.

Last Monday, February 3, the Department of Agriculture declared a food emergency to curb rice prices.

Impact on policy rates

Bank of the Philippine Islands lead economist Emilio Neri Jr. described the January inflation data as crucial, as it could influence the Monetary Board’s decision on policy rates on February 13. 

Neri explained that within-target inflation and disappointing gross domestic product growth in 2024 may be enough reason for the BSP to continue slashing interest rates. But he also acknowledged several risks that could limit the central bank’s easing cycle.

“The country’s current account deficit remains substantial, making the peso more vulnerable to external forces such as the monetary policy of the Federal Reserve and the policies enacted by [United States] President [Donald] Trump,” Neri said.

“Aggressive rate cuts from the BSP may exert pressure on the peso, which may contribute to inflation expectations.”

The Monetary Board vowed to continue taking a measured approach in the balancing act between ensuring price stability and sustainable economic growth. – Rappler.com