POOR Filipino households are bearing the heaviest burden from the fuel price shock, a state think tank said, losing a significantly larger share of their income compared to richer groups.
Surging fuel prices also, a Philippine Institute for Development Studies (PIDS) study highlighted the deeply regressive nature of the fuel shock and warned that gains against poverty could end up being reversed.
“For a country where more than one in eight Filipinos is poor, sustained fuel price increases pose not only a macroeconomic concern but also a welfare challenge,” PIDS senior research fellow Jose Ramon Albert said.
Poor households, which allocate a larger share of their spending to food and basic goods, are more exposed to rising costs as the fuel price increases ripple through supply chains.
The study estimated that low-income households could lose about 16.2 percent of their income while middle-income households may lose around eight to 10 percent and high-income households 3.4 percent.
Wealthier households will incur larger peso losses but these represent a smaller share of their earnings. In contrast, poorer households face smaller nominal losses but substantially larger reductions relative to their income — equivalent to roughly two months’ worth of earnings.
The PIDS also warned that the fuel shock was reversing poverty reduction gains. From a baseline rate of 13.2 percent in 2025, the current scenario is projected to push poverty up to 14.4 percent, translating to about 1.34 million additional Filipinos falling below the poverty line.
Notably, most of the newly poor are expected to come from low-income households that were previously above the threshold, highlighting the vulnerability of those just outside official poverty lines.
The impact will be more pronounced in rural areas, where poverty is expected to rise faster than in urban centers, “reflecting a heavier reliance on fuel-intensive agriculture, limited income diversification and higher food expenditure shares.”
“These structural disadvantages persist and compound at higher shock intensities,” Albert said.
Geographically, the PIDS study identified the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), other parts of Mindanao outside Davao, as well as areas in the Visayas, Bicol and Mimaropa as among the most vulnerable, given their already high poverty incidence and sensitivity to price shocks.
Albert also cautioned against broad-based fuel subsidies or tax cuts, noting that these tend to benefit wealthier households more. Estimates show that uniform price reductions can deliver roughly four times more benefits in absolute peso terms to rich households than to poor ones.
“A targeted emergency cash transfer can partially reverse poverty impacts at a manageable cost,” he said.
Albert recommended targeted cash transfers as a more equitable and cost-effective response. A proposed emergency program involving a one-time P6,000 transfer per household could help offset income losses and partially cushion the rise in poverty.
The proposed intervention, which would use existing government programs such as the Pantawid Pamilyang Pilipino Program (4Ps), pensions and other social protection mechanisms, is estimated to cost around P84 billion after accounting for overlaps in beneficiaries.
The study estimated that every peso spent on cash transfers could generate between P1.5 and P2.8 in economic output, making social protection not only a welfare intervention but also a macroeconomic stabilizer during periods of crisis.
“Poor households regain positive purchasing power under this design, confirming appropriate calibration,” Albert said.
However, the effectiveness of these measures depends on timely implementation. The report warned that delays in deploying targeted assistance could allow the shock to deepen, leading to more severe and prolonged increases in poverty.
“If the crisis worsens, additional quarterly tranches at slightly higher amounts (e.g., P7,500/household uniformly or, preferably, higher amounts for regions expected to be more affected) would be warranted,” Albert said.
