Inflation surges to 20-month-high 4.1% in March as Middle East war fuels oil price spike

A rider fills up his tank ahead of a predicted “big-time” fuel price hike. Domestic oil firms are expected to implement double-digit increases starting Tuesday, potentially pushing diesel prices to a near-historic ₱166 per liter. (Photo by Mark Balmores I MB)

Headline inflation, or annual price increases, soared to a 20-month high of 4.1 percent in March, as the war in the Middle East fueled skyrocketing oil prices.

National Statistician and Philippine Statistics Authority (PSA) chief Claire Dennis S. Mapa told a press briefing on Tuesday, April 7, that last month’s inflation pickup mainly came on the back of a 27.3-percent surge in gasoline prices and a faster 59.5-percent climb in diesel, reversing February’s slight year-on-year price declines for these commodities. Higher oil prices hiked transport inflation to 9.9 percent, accounting for more than half of the price increases observed during the month, Mapa said.

PSA data showed that the March headline rate was the highest since July 2024’s 4.4 percent, again breaching the upper end of the government’s two- to four-percent target range of year-on-year price hikes deemed manageable and supportive of economic growth.

At the end of the first quarter, inflation averaged 2.8 percent, still within the government target band.

Mapa told Manila Bulletin last month that over 36 percent of the consumer price index (CPI) basket is directly or indirectly vulnerable to rising oil prices. Energy items such as transport fuels, electricity, liquefied petroleum gas (LPG), and kerosene—accounting for 8.23 percent of the CPI—are most directly affected, while agricultural products, meals outside the home, and road passenger transport, which together make up about 28 percent of the CPI, may face secondary impacts from higher transport and raw material costs.

March has already shown signs that intensifying Middle East tensions were weighing on domestic prices, due to a continuous price shock in domestic petroleum prices, namely diesel, gasoline, and liquefied petroleum gas (LPG), affected by overall fuel supply volatility, according to Mapa.

The effect from the transport index is not new, as the PSA chief mentioned a similar situation at the onset of Russia’s invasion of Ukraine in 2022.

However, if the United States (US)-Iran-Israel conflict persists, Mapa warned that the current volatility in oil prices will likely continue to drive overall consumer prices upward, potentially causing inflation to remain elevated in the coming months.

“We are seeing higher numbers by April because we had a series of price increases during the first week, and we are not seeing any development that it might go down,” he stressed.

While the government reported the sharp increase in the inflation rate, the full impact of rising costs on consumer behavior has yet to be determined, as the PSA is currently processing movements in the first quarter to determine if consumers have started scaling back on household spending. The official impact on the country’s gross domestic product (GDP) will be released in early May.

Meanwhile, the Department of Economy, Planning, and Development (DEPDev) has assured that protection measures for consumers are in place through a whole-of-government effort. Through Executive Order (EO) No. 110, or the Unified Package for Livelihoods, Industry, Food and Transport (UPLIFT), the UPLIFT committee would strategize on how to stabilize the costs of domestic fuel supply and lessen the burden on transport costs.

DEPDev said that the government has already activated the emergency fuel procurement program, as 165.6 million liters of diesel have been secured throughout this month. Toll rebates for public utility vehicles (PUVs) and cargo trucks have been deployed on major expressways.

Other measures included the anti-hoarding guidelines, which were designed to minimize the risks of “artificial fuel shortages”; the expansion of the ₱20 rice program; and logistics reports for vegetable transport have been carried out. Vehicles carrying agricultural products will likewise receive reduced fees at roll-on, roll-off (RORO) terminals.

PUV drivers, farmers, and fisherfolk will also have service contracting, cash aid, and fuel subsidies, as per initiatives under the UPLIFT program.

“Our immediate priority is to ensure the safety of Filipinos abroad and to deploy timely and tangible solutions by providing critical support for the transport sector, commuters, and industries, while simultaneously diversifying the energy mix,” said DEPDev Secretary Arsenio M. Balisacan.

“The government is firmly committed to ensuring the continuous delivery of services, even as we pursue decisive measures to enhance the resilience of our economy and institutions, carefully balancing short-term relief measures and longer-term considerations toward enabling the economy to recover high growth quickly,” he highlighted.

— Gabriell Christel Galang

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