Inflation will remain as a major issue for consumers and the government this year as accumulated inflationary pressure, emerging adverse global conditions, and unfavorable domestic circumstances strongly suggest a reversal in the near term. This study presents an empirical analysis of the inflation dynamics in the country, decomposes current inflation trends, and highlights the key factors that will determine its future level including external factors (i.e., geopolitical tensions and global supply shocks, depreciation of the peso) and domestic inflationary risks (i.e., adverse weather conditions, oil and electricity price hikes, and expansionary monetary policies). The CPBRD projects that inflation in the Philippines in the first quarter of 2026 will be within the range of 1.88%-3.51%, leaning on the high-end forecast. Given that inflationary risks are beginning to unfold, government is expected to counter these by implementing proactive and effective responses in the short and medium term to stimulate growth of the economy.