Lower inflation under the Marcos Jr administration has not meant prices are lower and purchasing power greater for Filipinos. Since 2022, the prices of basic goods and services such as food, water and electricity have continued to rise while household incomes have failed to keep pace. The resulting squeeze on living standards is evident in rising self-rated poverty and hunger, despite official claims of economic stability.
Between 2022 and 2025, agricultural prices increased – regular-milled rice by 3 percent; root crops by as much as 39 percent; beans and legumes by up to 128 percent; fruits and vegetables by as much as 55 percent; fish by up to 33 percent; and livestock by as much as 10 percent. Electricity rates rose by up to 27% or Php2.80 per kilowatt-hour, and Metro Manila water charges increased by as much as Php20 or 21 percent per cubic meter.
These increases disproportionately affect lower-income households, which spend a larger share of their income on food and basic utilities. Self-rated poverty rose from 48% in June 2022 to 51% in November 2025 per the Social Weather Stations (SWS), indicating that rising prices translated into households’ worsening conditions.
The Marcos administration has largely attributed inflation to external factors such as global supply disruptions, energy price volatility, and climate-related shocks. While these factors are relevant, they do not sufficiently explain the persistence and severity of price pressures in the Philippines. Inflation in the country is not only cyclical; it is structural.
Persistent
The Philippine economy remains highly import-dependent, particularly for food and fuel. This exposes domestic prices to global price movements and exchange rate fluctuations. At the same time, domestic productive capacity in agriculture and manufacturing remains weak after decades of policy neglect. In 2024, agriculture’s share of gross domestic product (GDP) fell to 8% which is the smallest in the country’s history, while manufacturing’s share dropped to 17.6% or its lowest in 75 years. These have limited the Philippines’ ability to absorb shocks and stabilize supply.
The government’s primary response to rising food prices has been import liberalization, tariff reductions, and intermittent price interventions in the agriculture sector. These measures have not delivered sustained price relief. Instead, they have further weakened incentives for domestic production by exposing local producers to volatile global markets without adequate state support. Without substantial government support for farmers’ land access, inputs, irrigation, storage, logistics, and price-setting, agricultural supply remains constrained and vulnerable to disruptions.
Essential services are likewise plagued by the same structural weaknesses. Government allows water and electricity provision to be dominated by private firms operating under regulatory frameworks that allow cost pass-through and guaranteed returns. As a result, rate increases are recurrent and oblivious to consumers’ ability to pay. Policy tools to moderate costs like public provision and direct price control play a limited role. Without due government regulation, this structure leads to persistent upward pressure on prices.
Compounding these factors is the tax system. Consumption-based taxes, particularly the 12% value-added tax, raise the effective price of essential goods and services. Because these taxes are regressive, they intensify the burden of inflation on lower-income households while having limited impact on higher-income groups.
Widening gap
The people could better cope with rising prices if incomes rose correspondingly. This has not been the case. Wage adjustments have been limited and perennially lag behind increases in the cost of living – the Php498 average nominal minimum wage across the regions is well below the Php1,240 average family living wage, as of December 2025. A huge seven out of 10 employed remains concentrated in low-wage, informal, and precarious work, constraining households’ capacity to absorb higher prices.
Moreover, even when inflation moderates, the cumulative effect of past price increases continues to erode real wages.
At the same time, profits in sectors associated with basic goods and services expanded, reflecting the asymmetric impact of inflation across income groups. The wealth of the richest billionaires Manuel Villar, Enrique Razon and Ramon Ang, who also have businesses in the food industry, water, electricity, and the transport sector, increased by 135 percent, 107 percent, and 61 percent, respectively, from 2022 to 2025.
Speaking of the budget
Recent controversy surrounding the national budget highlights the policy context in which inflation persists. Budget priorities continue to favor debt servicing, incentives for large firms, and capital-intensive projects, while allocations for agriculture, public services, and social protection remain limited or fragmented.
Although some budget items are expanded in nominal terms, these increases often do not correspond to the scale of structural problems facing food production, wage adequacy, and service affordability. The budget thus reinforces, rather than corrects, an economic framework that relies heavily on market mechanisms and profit-driven private provision of services and utilities.
Policy directions
Addressing inflation in a meaningful way requires confronting its structural roots rather than stubbornly relying on short-term or market-oriented fixes.
In the short term, policy options include targeted wage increases, stricter price regulation of basic goods and utilities, and the removal or suspension of regressive taxes on basic goods.
In the medium term, measures are needed to strengthen domestic agriculture through higher public investment, price support mechanisms, and reduced dependence on imports. In utilities, stronger public control and regulation are necessary to align pricing with social objectives rather than profit guarantees.
In the long term, managing inflation sustainably requires a development strategy centered on domestic production and public provision of essential services. This can be financed with a progressive tax system that removes the burden on consumers and instead levies, for instance, taxes on billionaire wealth and windfall profits of corporations.
Inflation under the Marcos administration has underscored longstanding weaknesses in the Philippine economy. Without structural reforms that address both prices and incomes, the cost of living will remain a persistent constraint on poverty reduction and development.
