The manageable 2 percent inflation in January 2026 may prompt the Bangko Sentral ng Pilipinas (BSP) to cut interest rates by another 25 basis points at its Feb. 19 meeting, according to economists.
Data from the Philippine Statistics Authority (PSA) showed that the annual inflation quickened to 2.0 percent in January 2026 from 1.8 percent in December 2025.
The latest figure, led by higher utility and dining costs, fell within the BSP’s forecast of 1.4 percent to 2.2 percent and remained lower than the 2.9 percent recorded in the same month last year.
While the rate hit the lower end of the government’s 2.0 percent to 4.0 percent target range, analysts believe the need to support economic growth will outweigh the slight uptick in prices.
Reyes Tacandong & Co. senior adviser Jonathan Ravelas said he expects the BSP to proceed with a 25-basis point policy rate cut in the upcoming Monetary Board meeting.
“With inflation manageable and growth needing support, I expect the BSP to cut policy rates by 25 bps on Feb. 19 and another 25 bps within [the first half of 2026],” Ravelas said.
Security Bank research head and chief economist Angelo Taningco said the inflation print indicates that price pressures remain manageable. He noted that the uptick was within expectations due in part to base effects.
Rizal Commercial Banking Corp. chief economist Michael Ricafort also projected a 25-basis point reduction, pointing to weaker domestic growth and relatively stable foreign exchange rates.
“It is important to note that the headline inflation at 2 percent is back to the lower end of the BSP target inflation range of 2 percent to 4 percent, after 10 straight months below 2 percent, but still considered relatively benign. [This] could still support monetary easing measures such as cuts in local policy rates and banks’ reserve requirement ratio, as part of the policy priorities to boost economic growth,” Ricafort said.
HSBC ASEAN economist Aris Dacanay agreed that a quarter-point cut is likely on Feb. 19 as growth concerns take center stage. However, he cautioned that the recent data makes the path to further easing more challenging.
“Although growth has slowed to its slowest pace since 2011, barring the COVID-19 pandemic, inflation hasn’t been as benign as warranted over the past two months,” Dacanay said.
Despite the increase of the headline inflation, food inflation eased to 0.7 percent in January 2026 from 1.2 percent in December 2025.
“We see the easing of food inflation beneficial for Filipino households, particularly for lower-income families where food accounts for a larger share of expenditures,” said Department of Economy, Planning and Development (DEPDev) Undersecretary Rosemarie Edillon, in her capacity as the agency’s officer in charge while Secretary Arsenio Balisacan is on official business abroad.
Agriculture Secretary Francisco Tiu Laurel Jr. said while the low food inflation is encouraging, it is not a signal to relax. “We are closely monitoring food supply—from production to imports and distribution—because any slippage can quickly push prices higher and hurt consumers,” Tiu Laurel said.
Rice prices stayed favorable, with the Department of Agriculture’s maximum suggested retail price policy keeping prices at P43 per kilogram, down from P58 last year.
