The Philippines’ central bank warned on Tuesday of ‘spillover effects’ on consumer prices from sharp oil price increases, after the country’s inflation rate accelerated in March and breached the target range.
The Philippines’s consumer prices surged by +4.1%yoy in Mar-26 (Feb-26: +2.4%yoy), marking the highest reading since Jul-24 and exceeding the central bank’s target of +2-4%. This mainly reflects the impact of the oil price shock and unprecedented local currency depreciation. Transportation costs led the inflationary surge, accelerating by +9.9%yoy (Feb-26: -0.3%yoy). This spike was driven by skyrocketing gasoline (+27.3%yoy) and diesel (+59.5%yoy) prices, which accounted for over half of the total acceleration.
Broad-based increases were felt across all other sectors, most notably in food and non-alcoholic beverages (+3%yoy) and housing and utilities (+4.5%yoy). On a monthly basis, inflation accelerated by +1.4%mom (Feb-26: +0.2%mom), marking the highest reading since Jan-23. Underlying price pressures continued to rise, with the core CPI increasing by +3.1%yoy (Feb-26: +2.9%yoy), the highest since Apr-24.
In a separate data release, the Philippines’s industrial production rose by +4.6%yoy in Feb-26 (Jan-26: +2.6%yoy), recording the highest reading since Jul-24. This was due to stronger output in basic metals (+21.8%yoy), furniture (+29.0%yoy), and computer, electronic and optical products (+20.0%yoy).
The central bank noted that risks to inflation have tilted sharply to the upside as the conflict in the Middle East drives costs higher. Although it maintained its benchmark interest rate at 4.25% during an off-cycle meeting in Mar-26, officials signalled a readiness to tighten policy should inflationary pressures intensify. The next formal policy review is scheduled for 23 April. To mitigate the economic impact, the government has introduced targeted measures aimed at shielding vulnerable households and key industries, specifically within the fuel, transport, and food sectors, from the effects of rising costs and regional instability.
