Inflation likely accelerated in March and may have nearly overshot the upper end of the official target range, the Bangko Sentral ng Pilipinas (BSP) said, citing a surge in energy costs and the pass-through effects of a weakening currency that has fallen to record lows amid tensions in the Middle East.
In a statement on Tuesday, the central bank said it expected consumer prices to have risen between 3.1 percent and 3.9 percent last month.
If the forecast holds, the figure to be released by the Philippine Statistics Authority on April 7 would mark a pickup from the 2.4-percent pace in February and signal that inflation came close to breaching the central bank’s 2-percent to 4-percent target band.
“Inflation risks have intensified with upward price pressures arising from the significant increase in domestic petroleum prices, higher rice prices, increased electricity charges in Meralco-serviced areas, and depreciation of the peso,” the BSP said.
“The anticipated lower prices of vegetables, fish, and meat may help temper inflation, but upside pressures continue to warrant close monitoring,” it added.
The war, which has entered its fifth week, broke out after the United States and Israel launched joint attacks against Iran. The conflict has disrupted traffic in the Strait of Hormuz, a narrow shipping lane where 20 percent of global oil supply passes.
The turmoil has ignited fears for oil-importing countries like the Philippines, which became the first nation to declare a state of national energy emergency. Data from the Department of Energy show local gasoline prices have risen a net P45.30 per liter so far this year, while diesel has climbed P76.05 and kerosene P75.60.
This, as global crude prices have soared to $100 per barrel while fears of a drawn-out regional upheaval have boosted the US dollar, wreaking havoc on Asian currencies like the Philippine peso, which has weakened past the 60-per-dollar level.
The oil shock has already shaped the central bank’s policy stance ahead of its scheduled April 23 meeting. Officials opted for an off-cycle decision last week to keep the policy rate unchanged at 4.25 percent, even as they raised their average inflation forecast for 2026 to 5.1 percent—with price gains likely to hit as high as 5 percent in April and breach the official target band.
Governor Eli Remolona Jr. has said that raising borrowing costs to fight inflation could delay the economy’s rebound from a confidence shock triggered by a major corruption scandal. He added that higher interest rates—typically used to curb demand-driven inflation—would do little to counter supply-side price pressures stemming from the Iran conflict.
Overall, Remolona said policymakers do not expect a buildup in demand-side inflation, pointing instead to weak growth that could temper consumer spending.
“The BSP will remain vigilant and guided by incoming data, specifically on inflation and growth prospects,” the central bank said. “We will continue to monitor recent developments in the Middle East for their implications on inflation and economic activity.”
