Filipino family income grew 16.5% since 2023. So why doesn’t it feel like it?

• Filipino families experienced a 16.5% increase in average income from 2023 to 2025, but expenses rose even faster at 24.7%, leading to less financial breathing room.
• Despite higher incomes, families are feeling financially squeezed due to rising expenditures on necessities, with inflation further exacerbating the situation in 2026.
• Wages and salaries remain the primary source of income for Filipino families, but the average income figure is a national average and does not reflect individual household variations.

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MANILA, Philippines – On paper, Filipino families got a sizable income raise between 2023 and 2026, but there’s a reason why most still find their household budgets stretched thin.

The average Filipino family earned P411,350 in 2025, up 16.5% from P353,230 in 2023, according to the latest Family Income and Expenditure Survey (FIES). That’s about P34,300 a month, compared with P29,400 two years earlier. 

But the headline figure doesn’t mean the typical worker got a 16.5% raise, nor that families suddenly have that much more money to spend .

The biggest reason: Expenses increased even faster than income.

Family income may have risen, but average annual family expenditure surged past that at 24.7%, hitting P321,850 in 2025 from P258,050 in 2023. That works out to about P26,800 a month.

In peso terms, average income increased by P58,120 over the two-year period, while expenditure rose by P63,800. The difference between average income and expenditure consequently narrowed to P89,500 in 2025 from P95,180 in 2023.

According to Rappler resident economist JC Punongbayan, this suggests families had less financial breathing room.

“The fact that average income minus expenditure fell from 2023 to 2025 meant that Filipino families had less room for savings, emergencies, and debt payments,” Punongbayan told Rappler. “This may help explain why many families may not feel better off despite higher incomes.”

The squeeze also cut across income groups. No matter which income bracket you look at, expenditure grew faster than income between 2023 and 2025.

Among the poorest 10% of families, average income rose 19.1%, while expenditure increased 21.7%. For the fifth decile, income grew 16.8% against a 23.6% increase in spending. Among the richest 10%, income increased 15.6%, while expenditure jumped 27.2%.

Still, Punongbayan cautioned that faster spending doesn’t automatically mean Filipino families became worse off.

“Prices increased from 2023 to 2025, but inflation alone cannot explain the rise in expenses,” Punongbayan said. “Families may also have consumed more or shifted toward costlier items such as housing, utilities, transport, health, and dining out.”

Some families may also have accommodated higher spending by saving less, dipping into savings, or borrowing, he added.

“Thus, higher expenditure is not automatically evidence of worsening welfare. But its faster growth relative to income signals a squeeze on households.”

The FIES figures are also nominal averages, meaning they are not adjusted for inflation and don’t show what happened to every individual household. Punongbayan also noted that the latest poverty statistics, in fact, showed a decline in poverty.

Effects of Middle East crisis not yet reflected

The 2025 figures don’t yet capture how much harder household budgets have been squeezed this year.

Inflation accelerated sharply in 2026 as the conflict in the Middle East pushed up global oil and other commodity prices. 

By July, Philippine inflation stood at 6.2%, bringing the average for the first seven months of 2026 to 5% — far above the government’s target range of 2% to 4%. Transport prices alone were 11.9% higher than a year earlier.

“In the wake of the 2026 US-Iran war, higher oil prices affected budgets directly through fuel and electricity and indirectly through fares, freight, and food prices,” Punongbayan said. “So the 2025 FIES data probably understate today’s squeeze, although its precise impact on the gap between incomes and spending can’t be measured until newer household data become available.”

Even before that latest shock, necessities already ate up most family budgets.

Food and non-alcoholic beverages accounted for 33.3% of average family expenditure in 2025, while housing, water, electricity, gas and other fuels took another 21.6%. Together, those two categories accounted for nearly 55% of family spending.

Where does family income come from?

Across all Filipino families, wages and salaries were the biggest source of income in 2025, accounting for 54.6% of total family income collected across all families surveyed. 

Entrepreneurial activities accounted for another 15.5% of total family income, while 8.7% came from imputed rent. Cash receipts from abroad, which include remittances, contributed 8.5%, while cash receipts from domestic sources made up 5.3%. Other sources, including pensions, gifts, rentals, dividends, and interest, accounted for the remaining 7.4%.

Imputed rent is different from the other sources because it is not cash a family actually receives. For owner-occupied homes, the PSA assigns an estimated rental value to the housing service the family gets from living in its own property.

Take note that the P411,350 figure itself is also a national average across families, not the income of a typical individual household. Actual family incomes can vary widely depending on location, number of earners, employment, businesses, remittances, and other sources of income. – Rappler.com