Inflation in the Philippines

A short history of inflation in the Philippines

The Marcos Crisis (1983 to 1985)

Philippine inflation reached around 50% in 1984. The country had borrowed heavily through the 1970s, and after the assassination of Benigno Aquino in August 1983 capital fled, foreign lending stopped and the government declared a moratorium on debt payments. The peso was devalued sharply, output fell for two consecutive years, and the crisis contributed to the fall of the Marcos government in 1986.

Recovery and Targeting (1993 to 2002)

A new central bank was established in 1993 with a mandate focused on price stability, replacing an institution that had absorbed heavy losses. The Philippines adopted an inflation target in 2002, and inflation has been moderate since, moving mainly with rice and fuel prices, both of which the country imports and both of which weigh heavily in household spending.

Post-Covid Inflation (2021 to 2023)

In the Philippines, prices rose fastest in January 2023, at 8.7%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.