Photo credit: DA

In March 2025, the Philippines saw its headline inflation rate ease further, dropping to 1.8 percent from 2.1 percent in February. This marks a positive trend for the first quarter of the year, bringing the national average inflation rate from January to March 2025 down to 2.2 percent. Looking back a year ago, March 2024 had a higher inflation rate of 3.7 percent, making this month’s figure a clear sign of economic easing.

What’s Behind the Slowdown?

The drop in inflation was driven by several key factors, particularly in the food and transport sectors. Food inflation, for instance, slowed down to 2.3 percent in March 2025, down from 2.6 percent the previous month. This was mainly due to a significant decline in rice prices, which saw a 7.7 percent drop from the previous year, a bigger decrease than February’s 4.9 percent decline. Meat, vegetables, and even corn saw slower price increases, helping to keep overall food costs in check.

Transport also played a role in bringing down inflation, with the transport index showing a more significant year-on-year drop of 1.1 percent in March, compared to just 0.2 percent in February. Meanwhile, prices for restaurant services and accommodation services also softened, moving from 2.8 percent to 2.3 percent in March.

Despite these drops, some sectors still saw price increases. Alcoholic beverages and tobacco went up by 3.6 percent, while housing and utilities saw a slight rise in prices too, at 1.7 percent from 1.6 percent the previous month.

The Food Story: Rice Leads the Way

Food inflation has been a key concern for many Filipinos, but the latest figures show some relief. In particular, rice – a staple in Filipino households – showed the biggest improvement with its year-on-year price decrease. Along with rice, meat and vegetables also posted slower price increases. On the flip side, some food items like fish, oils, and dairy products saw higher inflation rates, contributing to the complex food price landscape.

Breaking Down the Core Inflation

Core inflation, which excludes volatile food and energy prices, also slowed down, coming in at 2.2 percent in March, down from 2.4 percent in February. This figure shows that while food prices are easing, there’s still pressure on other goods and services.

Inflation Inside and Outside NCR: A Regional Snapshot

Inflation in the National Capital Region (NCR) mirrored the national trend, easing to 2.1 percent in March, down from 2.3 percent in February. Food prices, particularly in heavily weighted categories like non-alcoholic beverages, contributed significantly to this slowdown. However, housing costs in NCR saw a slight increase, and some non-food sectors like personal care and miscellaneous goods also experienced higher inflation rates.

Outside NCR, areas showed similar trends with inflation slowing down to 1.8 percent in March from 2.0 percent in February. The transport sector in these regions, in particular, helped bring the overall inflation figure down.

Regional Highlights

Interestingly, the regions outside NCR displayed varied inflation rates. SOCCSKSARGEN (Region XII) continued to hold the lowest inflation rate for the fifth consecutive month, recording a 0.2 percent drop. On the other hand, Cagayan Valley (Region II) had the highest inflation rate among non-NCR regions at 2.9 percent.

What Does This All Mean?

For many Filipinos, the easing inflation is a welcome sign of stability in the economy. The slowdown in food and transport inflation, in particular, is good news for households dealing with rising living costs. However, the higher inflation in some sectors like alcohol, tobacco, and housing indicates that some areas of the economy are still feeling pressure.

As the year progresses, it’ll be interesting to see if this downward trend in inflation continues, providing more relief for consumers. For now, March 2025 offers a glimpse of a more manageable economic landscape, at least in terms of price increases.