Inflation in the Philippines remains a critical economic challenge as it exerts a tremendous influence on national development, consumer welfare, business stability, and economic growth. This study presents an empirical analysis of the inflation dynamics in the country, decomposing current inflation trends, and highlighting its key drivers which include both domestic inflationary pressures (i.e., electricity rate hikes, transport fare increases, elevated food prices, and social subsidies) and external factors (i.e., foreign exchange rates, higher global oil prices, and geopolitical tensions). Supply-chain disruptions and climate-related disturbances also contributed to the inflation problem. The study also used the Vector Error Correction Model (VECM) in providing statistical forecasts for the remainder quarters and full-year of 2025. The inflation projections were found to be optimistic, falling within the government’s target range of 2.0% to 3.0%, which suggests a period of relative price stability. Recognizing the importance of monetary policy in stabilizing inflation rates, continued oversight and effective government responses are needed to promote sustainable economic growth.