Inflation accelerates to 4.1% in March

Higher fuel prices, along with increased transport costs, pushed the country’s inflation rate to 4.1 percent last month, the Philippine Statistics Authority (PSA) reported.

It was markedly higher than the 2.4 percent and 1.8 percent a month and year earlier.

This is also higher than the 3.7 percent median forecast of The Manila Times' poll of economists, and the Bangko Sentral ng Pilipinas' estimate of 3.1 to 3.9 percent.

This marks the first time inflation breached the 2.0- to 4.0-percent target since it reached 4.4 percent in July 2024.

Core inflation, which excludes select food and energy items, rose to 3.2 percent in March 2026, from 2.9 percent in the previous month. It was also higher than the 2.2 percent core inflation in March 2025.

To date, headline and core inflation is still within the target at 2.8 percent and 3.0 percent, respectively.

Source: Manila Times

UBS sees Philippine growth at low end of 5%-6% goal this year

Philippine economic growth may land at the bottom of the government’s 5% to 6% goal this year as investment slowly recovers from last year’s flood control scandal, UBS Investment Bank Global Research said.

“Growth is near its trough, and we expect quarterly sequential momentum to strengthen to 1.4% over the next two quarters, and GDP (gross domestic product) growth to be 5% in 2026,” it said.

That would top last year’s 4.4% growth, which was weighed down by a corruption scandal that hit investments, household spending and government outlays.

It would also mark a return to the government’s target after three consecutive years of misses. UBS expects public investment to rebound early this year before normalizing toward yearend.

“In our revised forecasts, we assume a gradual and backloaded recovery in public investment, starting with a small uptick in the first quarter of 2026, with spending returning to second-quarter 2025 levels by the fourth quarter of 2026,” it added.

Gross capital formation, the investment component of GDP, fell 2.1% last year after a 10.9% drop in the fourth quarter, the biggest in more than four years.

Economic managers said corruption allegations from last year’s flood mess undermined business and investor confidence.

Across Southeast Asia, UBS expects the six major economies — Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam — to expand by about 4.9% this year.

“The region continues to benefit from deep integration into global manufacturing value chains, supported by a sizable domestic market,” Grace Lim, senior ASEAN (Association of Southeast Asian Nations) and Asia economist at UBS Investment Bank Global Research, said in a statement.

“Conditions for growth remain in place, with household consumption driving momentum in Indonesia, an increase in private investment under way in Thailand and the Philippines, and resilient tech related export strengths in Singapore and Malaysia,” she added.

Remittances, a key source of foreign inflows, could help cushion the economy, but analysts warn that global shocks may pose risks.

The Middle East war is likely to weigh on growth, according to Metropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa.

“For the economy, we’ll likely brace for weaker growth,” he said in a note. “Inflation is expected to breach the target and the central bank’s easing cycle is over.”

The peso-dollar rate is pressured higher as a bloated oil bill means more demand for dollars, he added.

The war could prompt the Bangko Sentral ng Pilipinas to hike rates, ending a nearly two-year easing cycle.

“The war in the Middle East likely means inflation will breach the target, growth will stay at 4% and the next [central bank] move is a hike and not a cut in 2026,” the Metrobank economist separately said in a post on social media platform X.

The Monetary Board last month cut the reverse repurchase rate by 25 basis points (bps) to 4.25%, the lowest since August 2022, trimming key rates by 225 bps since easing began in August 2024.

Singapore-based DBS Bank warned the Philippines might see the highest regional price pressures from oil.

“Amongst the ASEAN-6 countries, the net oil trade balance is most adverse in Thailand, Malaysia and Vietnam (as a percentage of GDP), with the pass-through to price pressures most material in Thailand and the Philippines,” DBS Senior Economist for Eurozone, India and Indonesia Radhika Rao and Senior Economist for ASEAN Chua Han Teng said in a note.

The Department of Energy has warned that oil price increases in the local market would continue as the Middle East war could last weeks.

Since January, pump prices have increased by P6.70 a liter for gasoline, P9.40 for diesel and P7.70 for kerosene.

Source: Business World

War on Iran could push PH inflation to near 4%

An escalation of the conflict in the Middle East could push Philippine inflation toward 4 percent in the coming months, an analyst said.

Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. said developments in the Middle East had reintroduced volatility into global energy markets, with direct implications for inflation, interest rates, remittances and the peso.

“A renewed leg higher in global oil prices would amplify second-round effects through transport, electricity, and logistics costs, potentially broadening inflationary pressures beyond food and fuel,” Neri said in a commentary.

Over the weekend, the United States and Israel launched coordinated airstrikes on Iranian targets, prompting Iran to retaliate with strikes across the Middle East.

As the region remains a critical oil supplier, any sustained disruption could affect global supply and inflation expectations, with the immediate transmission channel being energy prices.

Neri noted that Iran produces about 3.3 million barrels per day, making it the fourth-largest producer within OPEC. More crucially, around 20 percent of global oil supply and roughly 30 percent of globally traded crude pass through the Strait of Hormuz, equivalent to about 20 to 30 million barrels per day.

Under a moderate escalation, oil prices could rise to $75 to $80 per barrel, Neri said. A prolonged blockade of the Strait of Hormuz, meanwhile, could see prices surge to $100 to $120 per barrel, and this outcome was said to have around a 33-percent probability.

For the Philippines, higher oil prices could compound existing rice-driven inflation pressures. BPI expects February inflation to have risen from 2.0 percent in January.

The bank’s full-year inflation forecast currently stands at 3.7 percent but Neri said it may be revised after official February data is released this Thursday

“If WTI (West Texas Intermediate) oil holds near $80/bbl through June or monthly rice inflation continues to accelerate, the policy space for further easing could narrow materially, potentially limiting the BSP’s (Bangko Sentral ng Pilipinas) ability to implement further rate reductions this year,” Neri said.

He also warned that the conflict posed downside risks to remittance flows, as nearly 40 percent of overseas Filipino workers are based in the Middle East.

However, cash remittances from the region accounted for just 18 percent, or $6.5 billion, of total inflows of $35.6 billion in 2025, Neri said, “suggesting that while risks are elevated, the overall impact may be contained than imagined unless the conflict significantly escalates.”

Government officials on Tuesday said they were monitoring developments in the Middle East and acknowledged that an escalation or a prolonged conflict would have an economic impact.

With fuel prices a particular concern, President Ferdinand Marcos Jr. said he was considering asking Congress to grant him emergency powers to lower fuel excise taxes if Dubai crude tops $80 per barrel.

He also said fuel subsidies could be provided to the transport and agriculture sectors.

Marcos said that the safety of Filipinos in the region was a priority and urged an end to the conflict.

The Department of Agriculture (DA), for its part, said it was working to manage the impact of the war on Iran on food prices and the farm sector.

The Strait of Hormuz, it noted, was a critical oil trade route and a disruption of supply could affect commodities such as fertilizers and also raise logistics costs.

Costs of imported products like wheat and animal feed could also rise, which may then translate to higher retail prices of bread, pork, poultry and livestock. The DA said this would complicate the government’s efforts in managing food inflation.

The Department of Energy, meanwhile, echoed Marcos’ proposal to reduce fuel excise targets and reiterated the possibility of staggering the substantial fuel price hikes that are expected to result from the conflict.

It also reiterated the president’s claims that fuel supplies remained adequate and were above the mandated minimum, but added that was preparing for a worst-case outcome.

“In this development in the Middle East and with regards to fuel supply, we are hoping for the best, but we are preparing for the worst,” Energy Secretary Sharon Garin said.

Source: Manila Times