Global Business Today
Middle East Conflict Pushes Philippine Inflation to Two-Year High
Rising fuel costs driven by the ongoing Middle East conflict have pushed inflation in the Philippines to its highest level in nearly two years, highlighting the vulnerability of import-dependent economies to global energy shocks.
New data shows that inflation accelerated sharply to 4.1 per cent in March, a significant jump from 2.4 per cent recorded in February. This marks the fastest pace of price increases since mid-2024 and reflects mounting pressure on domestic prices.
Officials attribute the spike largely to surging transportation costs, which have been directly impacted by rising fuel prices. National Statistician Dennis Mapa explained the trend, stating, “The main reason for the rise in inflation this March 2026 compared to February is the increase in transport prices, with a 9.9 per cent inflation rate.”
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The cost of diesel, a critical fuel for public transportation across the country, has risen dramatically, jumping by nearly 60 per cent. This has translated into higher fares and logistics costs, feeding into broader inflationary pressures.
Further analysis from economic authorities indicates that non-food inflation climbed to 4.9 per cent in March, driven in part by a sharp acceleration in private transport costs, which rose by 31.3 per cent amid the fuel price surge.
Food prices also contributed to the upward trend, with the food and non-alcoholic beverages index increasing at a faster annual pace of 3.0 per cent, compared to 1.8 per cent in the previous month.
The energy crisis has prompted urgent policy responses. The government has declared a national energy emergency and begun diversifying its oil supply sources, including engaging non-traditional partners such as Russia. Additional measures introduced include financial support for transport workers and adjustments to working schedules for public sector employees.
The surge in fuel prices can be traced to disruptions in global oil supply following military strikes involving the United States and Israel, which triggered retaliatory actions and the closure of key shipping routes by Iran.
Despite the tensions, diplomatic engagements are ongoing. Philippine Foreign Secretary Theresa Lazaro recently held discussions with her Iranian counterpart, resulting in assurances that oil shipments destined for the Philippines would be granted safe passage through the affected corridor.
Nonetheless, the broader outlook remains uncertain as global energy markets continue to react to geopolitical instability. For economies heavily reliant on imported fuel, the situation presents a persistent risk to price stability and economic growth.
