Filipinos expect inflation to still rise in 2025

By Rose de la Cruz

Except for government economists and state officials, no one else believes that inflation would improve next year based on the legacy of high inflation over the past few years, said the Cost of Living Monitor done by Paris-based Ipsos Group S.A., a multinational market research and consulting firm.

The Ipsos survey said most Filipinos see inflation rising over the next year and do not expect the pace of prices increases to normalize anytime soon.

Ipsos found that 80 percent of Filipinos see the rate of inflation to rise in 2025.

“While economists point out that inflation — and interest rates — have fallen in many countries, you might assume that consumers should be feeling more positive by now about their own financial situation and more optimistic about where their country’s economy is headed in 2025,” said Ipsos CEO Ben Page.

“In fact, they are the opposite. The legacy of high inflation over the past few years is that an expectation of price rises is now hard-wired into the public consciousness,” his statement was lengthily quoted by Business World.

The Philippines’ outcome is also much higher than the 65 percent overall average across 32 countries.

“This is something that is felt across the board. In 21 of the 32 countries surveyed people are more likely to think prices will rise at a faster rate than they did earlier this year,” Ipsos said.

Most Filipinos think that inflation has yet to normalize, with 28 percent expecting inflation to never return to normal. Another  27% see prices normalizing after next year, within the next year (26%) within the next six months (to 5%), and within the next three months (to 7%).

Only 6 percent of respondents said that inflation had already normalized.

Inflation quickened to 2.5 percent in November from 2.3 percent in October as food prices rose after a series of typhoons hit the country. In the 11-month period, headline inflation averaged 3.2 percent, Business World added citing Ipsos.

This year so far, inflation has settled within the 2-4 percent range, except for the 4.4 percent spike in July.

The Bangko Sentral ng Pilipinas expects inflation to settle at 3.1 percent this year, 3.2 percent in 2025 and 3.4 percent in 2026, even as the BSP recognized that the risks to the inflation outlook for next year until 2026 have shifted to the upside.

“While inflation rates are going down, people are not feeling it in the way policy makers and central banks would have hoped,” Ipsos said. “People expect price rises across all areas of spending, from utilities to food.”

Globally, 70 percent of respondents attribute the state of the global economy as the biggest contributor to the rising cost of living. This is followed by government policies (69 percent), interest rates (66 percent), businesses making excessive profits (62 percent) and the Russia-Ukraine war (58 percent).

Meanwhile, 75 percent of Filipinos expect interest rates to rise over the next year.

The BSP began its easing cycle in August this year, delivering a total of 50 basis points (bps) worth of rate cuts so far. This brought the benchmark to 6 percent.

The Monetary Board could deliver another 25-bp cut at its final policy review of the year on Dec. 19.

“There is often a time lag between inflation rates subsiding and consumer confidence returning. But this time things feel rather different. What we are now seeing in many countries is a rise in the number of people who say they are financially struggling,” according to Ipsos.

The survey also showed that 10% of Filipinos expect their own standard of living to fall over the next 12 months.

Ipsos said that in terms of financial management, only 37 percent of Filipinos are “doing alright” compared to 26 percent that said they are just getting by; 20 percent who are finding it quite difficult; 9 percent finding it very difficult and 9 percent who are living comfortably.

Around 48 percent of Filipinos see the economy as being currently in a recession, as far as they are aware and 28 percent saying the opposite while 23 percent said they do not know.

“Across 32 countries people say they prefer tax cuts even if it means less money for public services, over spending more and paying greater taxes,” Ipsos said.

“However, this masks big differences across countries. Türkiye, Romania and the Philippines back tax cuts, while Indonesia and Sweden want better public services.”

The survey found more than half (52 percent) of Filipinos prefer that their personal taxes be cut even if it means there will be less government spending on public services.

The survey also found 70 percent of Filipinos expect the taxes that they pay to rise over the next year despite assurances from the Department of Finance that it does not plan to introduce new taxes this year and potentially until the end of the Marcos administration, apart from those already pending in Congress.

DoF’s priority tax measures include the value-added tax on digital service providers, excise taxes on single-use plastics and pickup trucks, the rationalization of the mining fiscal regime, and the motor vehicle road user’s charge, among others.