SUBSTANTIAL fuel price increases caused by the war in the Middle East pushed inflation to a 20-month high of 4.1 percent in March, the Philippine Statistics Authority (PSA) reported on Tuesday.
The result — markedly higher than January’s 2.4 percent and the 1.8 percent a year earlier — topped the Bangko Sentral ng Pilipinas’ (BSP) 3.1-3.9 percent estimate and the 3.7 percent median in a Manila Times poll of economists.
The last time that inflation was higher was in July 2024 when it hit 4.4 percent.
Core inflation, which excludes select food and energy items, rose to 3.2 percent from 2.9 percent in February. It was also higher than the 2.2 percent recorded in March 2025.
“Headline inflation rose due mainly to domestic petroleum prices, which surged as the ongoing Middle East conflict disrupted key global oil supply channels,” the BSP noted.
“Electricity rates also rose due to higher transmission and generation charges,” it added.
While year to date headline inflation remained within target at 2.8 percent, the BSP said that “mounting risks to the inflation outlook require sustained vigilance.”
“The BSP will carefully consider incoming data at its upcoming monetary policy meeting to assess the need for action in keeping with its price stability mandate,” it added.
Fuel price surge blamed
National Statistician Claire Dennis Mapa said consumer price growth was primarily driven by the transport index, which recorded 9.9 percent inflation and accounted for 54.8 percent of the overall figure.
Gasoline inflation, in particular, was said to have hit 27.3 percent while diesel posted a 59.5-percent surge.
Also contributing was the food and non-alcoholic beverages index, which posted a faster increase of 3.0 percent from 1.8 percent in the previous month.
Food inflation alone accelerated to 2.8 percent from 1.6 percent in the previous month and 2.3 percent in March 2025.
Peso purchasing power falls
Mapa also said that the purchasing power of the peso had significantly weakened, with P1 in 2018 now equivalent to just P0.75 as of March.
“Our peso’s purchasing power is inversely related to the inflation rate. When inflation rises, purchasing power falls,” he said.
“The peso’s estimated average purchasing power this March is P0.75, using 2018 as the base, reflecting the overall effect of inflation from 2018 to now,” he added.
SMIC Group economist Robert Dan Roces told The Manila Times that the peso’s purchasing power mainly reflected cumulative price increases rather than a recent shock.
“The recent softness is still largely a supply story, with food prices the key swing factor locally, amplified by global oil volatility,” he said.
Reyes Tacandong & Co. senior adviser Jonathan Ravelas said this could also mean that prices had risen faster than incomes, with costly food, transport, electricity and rents, along with volatile oil prices, supply disruptions, and a weaker peso, reducing what each peso can buy.
“This is the cumulative effect of past inflation, so even if inflation slows, the damage doesn’t disappear overnight,” he said.
“Looking ahead, inflation should gradually ease, but restoring purchasing power will be slow and uneven unless food prices stabilize and wages catch up,” Ravelas added.
“The key now — for households, businesses and government — is to focus on food inflation and cost control, because that’s where the peso is bleeding the most.”
Working to address impact
Socioeconomic Planning Secretary Arsenio Balisacan, meanwhile, said the government had implemented coordinated measures to curb rising inflation and lessen the impact of the Middle East conflict on households and key sectors.
“The government stands ready to address emerging inflation pressures through strategic, well-targeted, and time-bound interventions, particularly in fuel, transport, and food,” he said.
Balisacan said the issuance of Executive Order 110, which declared a national energy emergency, would help the government identify and coordinate strategic measures.
Among others, an emergency fuel procurement program has been implemented and 165.6 million liters of diesel have been secured for delivery through April. Toll rebates for public utility vehicles and cargo trucks are also being offered on major expressways.
Agriculture Secretary Francisco Tiu Laurel Jr., meanwhile, said his department was implementing a series of measures to protect farmers, fisherfolk, and consumers from rising costs triggered by surging fuel prices.
These include fuel subsidies and financial assistance to farmers and fisherfolk to offset production costs and affordable fertilizers and other alternatives are being secured via Planters Products Inc. and the Fertilizer and Pesticide Authority to sustain production.
The P20-per-kilogram rice initiative will also continue to be rolled out and the other interventions such as price caps on imported rice are being exported.
The Department of Agriculture recently mobilized trucks to address a vegetable oversupply in Benguet, where high fuel costs prevented farmers and traders from transporting produce to markets, and is also tapping state-owned Food Terminal Inc. to ensure that onion farmers receive fair prices.
“Beyond immediate assistance, we are investing in infrastructure and supply chain improvements to make the agricultural sector more resilient,” Tiu Laurel said.
“These steps will lower input costs, improve market access, and ensure farmers and fisherfolk can sustainably meet demand even under challenging conditions.”
While prices are expected to remain elevated in the near term, he gave assurances that the country’s food supply remained sufficient. WITH A REPORT FROM GISELLE JORDAN
