While growth disappointed in 2025, inflation offered a rare bright spot, creating both relief and complexity for policymakers navigating a fragile recovery.

Average inflation slowed to 1.7 percent in 2025, down from 3.2 percent in 2024 and a peak of 6.0 percent in 2023. Price pressures across food, transport, and utilities eased, allowing households to regain some purchasing power and helping sustain consumption despite weaker headline growth.

For 2026, BDO expects inflation to normalize around 3.0 percent, well within the Bangko Sentral ng Pilipinas’ 2-to-4 percent target range, assuming no major supply shocks. This benign inflation environment theoretically opens space for policy support.

However, subdued inflation alone cannot offset slowing investment, delayed public spending, and cautious business sentiment. The challenge now is converting price stability into renewed economic confidence, especially as households and firms remain sensitive to governance issues and external risks.