Metropolitan Bank & Trust Company (Metrobank) expects headline inflation to remain within the Bangko Sentral ng Pilipinas’s target range for February, even as low base effects and supply chain challenges for key staples like rice and onions pressure prices.
Metrobank researchers Maria Kaila Balite and Joaquim Pantanosa said the projected uptick in prices should contribute to a steeper bond yield curve in the coming months. Faster inflation could also mean the Bangko Sentral ng Pilipinas (BSP) may refrain from cutting rates too deeply, which could support the Philippine peso.
The BSP cut policy rates in February. While the effects of monetary easing take time to manifest in price levels, low base effects may begin to fan inflation and cause the bond yield curve to steepen, the bank said.
Metrobank forecasts headline inflation to settle at 2.4 percent for the month, well within the BSP target band of 2 percent to 4 percent. It represents an uptick from 2 percent registered in January.
Rice deflation slowed to a single digit in January. Farmgate prices for the grain increased month-on-month following a 4-month import ban, according to the Department of Agriculture (DA).
The ban aimed to protect farmers from a sharp price fall, but the delayed arrival of January imports following its lifting sustained rice price increases through early February. Annual rice deflation continues through February, putting downward pressure on headline inflation for the month.
Onion prices will also provide downward pressure as the peak of the harvest in March approaches. Farmer groups said imports are flooding the local market and dragging prices, though the DA claimed the import volume is not overwhelming.
Vegetables, fruits and seafood are expected to fan inflation in February due to low base effects, as price increases for these items began slowing during the same period in 2025. Preliminary data from the Philippine Statistics Authority suggests pork prices may have been lower year-on-year after a sharp decline in African Swine Fever cases allowed hog production to rebound.
Electricity rates will also quicken inflation this month. While most rates across the country are higher year-on-year, rural areas faced notably elevated prices, specifically from Davao Light and Power Company and Visayan Electric Company.
Despite higher pump prices month-on-month, gasoline and diesel costs settled lower year-on-year in line with global oil price swings.
Rental prices for housing were among the top contributors to inflation in January as annual contracts are commonly renewed at the start of the year.
A faster year-on-year rise in rental prices is expected in February and March as more lease contracts are renewed. Food, energy and rental prices will continue to drive headline inflation in February, with rice and onion prices only partly providing reprieve.
