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Farm output is expected to grow faster this quarter, building on the 2% expansion posted in the same period last year, the Agriculture chief said.

“It should be a bit higher than last year, as long as there are no adverse weather conditions,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. told BusinessWorld via WhatsApp.

Mr. Laurel said improved production in poultry and crops, particularly corn and onions, is expected to support the sector’s performance during the quarter.

He added that higher output in rice and fisheries is likely to strengthen the agriculture sector’s second-quarter performance.

Mr. Laurel, however, did not specify a target as he said the Department of Agriculture (DA) is still finalizing its forecasts due to recent developments in the Middle East.

“We are recalibrating [our projections] due to the effects of the war on fuel and logistics,” he said.

The DA earlier said it expects the impact of the Iran crisis to reflect in the cost of synthetic fertilizers, which are largely petroleum-based, as well as in fuel used by farmers and fisherfolk.

Freight costs may also increase due to higher risk premiums on shipments from the Persian Gulf.

In the first quarter of 2025, farm output grew 2% year on year to PHP 438.02 billion from PHP 429.62 billion, supported by strong poultry production, which expanded 9.8%.

Crop production during the period grew 1%, while fisheries output rose 1.5%. Meanwhile, livestock production declined 2.8%, largely due to a drop in the hog population caused by the spread of African Swine Fever (ASF).

The DA said that it expects further recovery in the swine sector this year as it implements repopulation and ASF vaccination programs. — Vonn Andrei E. Villamiel, Reporter

Manufacturing output eased to a two-month low in January dragged by contractions in food and transport equipment as well as sluggish growth in other non-metallic mineral products, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary results of the PSA’s latest Monthly Integrated Survey of Selected Industries (MISSI) showed factory output, as measured by the volume of production index, slowed by 1.2% year on year in January.

This was slower than the 3.2% growth in January 2025 and the revised 2% increase recorded last December.

It was also the weakest growth in two months or since the 0.6% uptick in November last year.

The sector’s output has been in positive territory for nine straight months.

Month on month, January’s output grew by 4.7%, from a 3.6% decline in December. Stripping out seasonal factors, it inched up by 2.8% from 1.1%.

In comparison, the Philippines in S&P Global Manufacturing Purchasing Managers’ Index (PMI) expanded 52.9 in January from 50.2 in December. It was the fastest pace in nine months or since the 53 expansion logged in April 2025.

PMIs are a leading indicator for factory activity, reflecting the volume of materials purchased in advance of manufacturing operations weeks or months down the line. A reading above 50 separates expansion from contraction.

Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said that the slip in manufacturing activity points to the “muddling through” narrative of 2026.

“While we expect economic activity to slightly recover this year, the absence of concerted efforts to restore business confidence and improve business operations appears to continue weighing on industrial activity,” he said in an e-mail.

Data from the Bangko Sentral ng Pilipinas’ inaugural monthly business expectations survey (BES) showed that businesses had a current-month confidence index (CI) of 0.9% in January.

While the positive value indicated business optimism, the figure was a crash from the quarterly CI of 29.7% seen in the fourth quarter of 2025.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the industrial production slowdown in January is largely attributed to political scandal last year that curbed infrastructure spending, with anti-corruption reforms dampening demand across supply chains and weighing down on manufacturers.

“Higher tariffs could have weighed on global trade, adversely affecting manufacturers that are part of the global supply chains of exporters,” Mr. Ricafort said in an e-mail.

In a phone interview, Philippine Chamber of Commerce and Industry Honorary Chairman Sergio R. Ortiz-Luis, Jr. said that business uncertainty caused by further potential US tariffs contributed to the slip.

According to the PSA, the slowdown in factory output in January was due to the sharp annual declines in the heavily weighted food index.

Food manufacturing’s VoPI dipped by 0.5% in January from the 14.9% growth in December and a reversal from the revised 15.5% growth a year earlier.

The food products index accounted for 18.7% of manufacturing activity.

Meanwhile, slowdowns were recorded in other non-metallic mineral products (6.8% in January from 32.4%in December), and transport equipment (-1.9% from 5.8%).

Eight other divisions logged declines while the remaining 11 posted expansion.

Additionally, the PSA said that the top three industry divisions that contributed to the overall year-on-year growth in the VoPI were computer, electronic and optical products (23.6% from 14.1%), beverages (21.1% from 4.8%), and electrical equipment (16.7% from 11.4%).

Mr. Agonia said that the sudden plunge in food manufacturing growth may be attributed to seasonal adjustments and manufacturing conditions.

“Food manufacturers likely scaled down production after the holiday season, while cost pressures continue to build. We note that growth in the Producer Price Index (PPI) has been accelerating since November last year, largely driven by the food products segment,” he said.

Year on year, the PPI grew by 1.5% in January 2026, from the 0.9% posted in the same period last year, and the 0.8% in December, PSA data showed.

Its food subindex grew by 1.3%, higher than the 0.4% in January 2025 and reversing the 0.1% contraction last December.

For the following months, Mr. Agonia said that people are monitoring movements in global oil prices following conflict escalation in the Middle East.

“These higher oil prices are expected to raise production costs for most economic sectors, leading to deterioration in manufacturing conditions and higher retail prices.”

Mr. Ortiz-Luis said that that continued discussions with the US is necessary to improve factory outputs.

“It’s like we have no leverage with them. And [we’re pushing them to] define what exactly the applicable tariffs are,” he said.

Average capacity utilization — the extent industry resources are used in producing goods — averaged 77.8% in January, slightly higher from the 77.6% in December and 76.2% in January 2025.

All industry divisions reported capacity utilization rates above 60%, with coke and refined petroleum products reporting the highest rate at 84.5%. — Pierce Oel A. Montalvo

Philippine inflation accelerated to a 13-month high in February as rising costs for rice, fuel, electricity and other utilities added pressure on household budgets, the Philippine Statistics Authority said on Thursday.

The consumer price index (CPI) picked up to 2.4% from 2% in January and 2.1% in February 2025. It was the fastest since January 2025, when inflation hit 2.9%.

February inflation fell within the Bangko Sentral ng Pilipinas’ (BSP) 2.3%-3.1% forecast and matched the 2.4% median estimate in a BusinessWorld poll of 17 analysts.

February also marked the second straight month that inflation stayed within the central bank’s 2%-4% target, bringing the two-month average inflation rate to 2.2%.

“Overall price conditions remain stable,” Economy Secretary Arsenio M. Balisacan said in a statement. “However, we are mindful of recent geopolitical developments, which we are closely monitoring, along with domestic supply conditions of key commodities.”

The peso’s purchasing power remained at PHP 0.76 for every PHP 100 worth of goods and services in 2018, the same level recorded in January and the lowest since the base year was adopted.

National Statistician Claire Dennis S. Mapa said faster price increases in food and nonalcoholic beverages, housing and utilities and restaurants and accommodation services pushed inflation higher last month.

Inflation for food and nonalcoholic beverages accelerated to 1.8% from 1.1% in January, driven by faster price increases for vegetables, fish and seafood, as well as a slower decline in cereals and cereal products.

Inflation for restaurants and accommodation services also quickened to 4.4% from 4% a month earlier. Prices for restaurants, cafés and similar establishments rose 4.5% from 4.1% pace in January.

Core inflation, which strips out volatile food and fuel prices, edged up to 2.9% in February from 2.8% in January and 2.4% a year earlier. This was the fastest  since June 2024.

Energy costs

Inflation for housing, water, electricity, gas and other fuels, which accounted for almost 30% of the headline CPI, rose to 3.5% in February from 3.3% a month earlier.

Fuel prices have been rising steadily in recent weeks, with diesel and kerosene marking 10 consecutive weekly increases and gasoline climbing for eight straight weeks.

In February alone, pump price adjustments led to a net increase of PHP 3.20 a liter for gasoline, PHP 4.40 for diesel and P3.50 for kerosene.

Liquefied petroleum gas (LPG) prices also increased after oil companies implemented a PHP 1.50- to PHP 1.55-per-kilo hike, bringing the price of a standard 11-kilo household tank to PHP 836.50 to PHP 1,137.05.

Rising tensions in the Middle East have raised concerns about possible disruptions in global oil supply, which could further push up energy costs for net oil importers such as the Philippines.

The Department of Economy, Planning and Development said authorities are monitoring domestic fuel price movements and could intervene if global oil prices rise sharply.

“Further, the government will implement measures to reduce fuel consumption, first by government offices, and we encourage the private sector to do the same,” Mr. Balisacan said.

These measures include the use of shuttle buses, encouraging carpooling and adopting flexible work arrangements such as work-from-home or compressed workweeks.

Electricity costs also rose after Manila Electric Co. increased its rate by 22.26 centavos per kilowatt-hour (kWh) in February to PHP 13.1734 per kWh from January. Electricity inflation climbed to 6.7% from 6.5%.

Rental inflation also edged higher to 3% from 2.9%, while inflation for water supply rose to 4% from 3.5%.

Rice prices, a key driver of Philippine inflation, showed signs of firming in February.

Rice inflation remained negative at -3.4%, but this was a slower decline than -8.5% in January, indicating a gradual rebound in prices.

Regular milled rice prices fell 2.5% year on year to an average of PHP 46.01 per kilo but rose 5.14% compared with January levels.

Mr. Mapa said rice inflation could move closer to zero — or even turn positive — if month-on-month price increases persist in March.

Meanwhile, inflation for the bottom 30% of income households accelerated to 2.5% in February from 1.6% in January and 1.5% a year earlier, the fastest in more than a year.

Inflation outlook

The BSP said inflation expectations remain well anchored despite the February uptick, although authorities are assessing the potential impact of Middle East tensions on the domestic economy.

“The BSP will ensure that policy settings remain in line with its pursuit of price stability conducive to sustainable growth and employment,” it said in a statement.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the latest data point to rising risks, particularly from global oil markets.

“While inflation remains manageable, the third straight monthly uptick tells us upside risks are building — especially if global oil supply disruptions persist,” he said via Viber.

Chinabank Research said inflation might average around 3.6% this year, near the upper end of the BSP’s target, though the outlook could worsen if geopolitical tensions persist.

Morningstar DBRS also warned that net oil-importing economies such as the Philippines remain vulnerable to rising energy costs and potential supply disruptions stemming from the war in the Middle East.

The Bangko Sentral ng Pilipinas (BSP) should hold interest rates steady, rather than cut or raise, amid rising global oil price pressures from the Middle East war, according to the Institute for Risk and Strategic Studies, Inc. (Salceda Research).

In a report released on Wednesday, the think tank said further rate adjustments might be unwise amid uncertainties over crude prices stemming from disruptions linked to the war between Israel and Iran.

“The appropriate response is a pause, not a hike — the inflation is supply-driven and rate hikes would not reduce oil prices,” Salceda Research said. “The BSP should communicate clearly that the easing cycle is on hold, not reversed, to avoid market overreaction.”

The Strait of Hormuz, a critical oil transit point, has become a flashpoint after Israeli and US military strikes on Iran. Roughly one-fifth of the world’s oil supply passes through the strait, and any disruption could push global oil prices higher, squeezing import-dependent economies such as the Philippines.

Salceda Research estimated that sustained crude prices above $80 per barrel for more than a month could push Philippine inflation toward 4%, near the upper limit of the central bank’s target band. “Second-round consumer price index effects will push inflation toward the 4% upper target boundary within two quarters,” it added.

At its first policy review of 2026, the BSP cut the key interest rate by 25 basis points (bps) to 4.25%, the sixth consecutive reduction and a total easing of 225 bps since August 2024.

BSP Governor Eli M. Remolona, Jr. has noted that easing alone might not stimulate an economy constrained by weak sentiment and lingering governance issues.

Salceda Research also cautioned that the Philippine peso could come under renewed pressure, potentially testing PHP 59.50 to PHP 65 a dollar.

The peso briefly recovered to around PHP 57 a dollar last month after record lows in January but has remained above PHP 58 amid geopolitical uncertainty.

“The BSP should allow the peso to depreciate within the PHP 59.50-PHP 61 band… intervening [only] to prevent disorderly overshooting beyond P62,” the think tank said.

Rapid moves past PHP 62 could front-load inflation and trigger capital outflows, it said. “Graduated, transparent intervention is preferable to defending a fixed level. — Katherine K. Chan, Reporter

The Philippine goverment plans to procure at least a million barrels of diesel to secure domestic fuel supply as tensions in the Middle East threaten global oil trade and China moves to curb refined fuel exports.

The Department of Energy (DoE) is studying a proposal to direct state-run Philippine National Oil Co. (PNOC) to buy the diesel for a strategic stockpile that could cover about five days of domestic consumption, Oil Industry Management Bureau Director Rino E. Abad told reporters on Thursday.

The planned purchase is equivalent to roughly 200,000 barrels a day, or about 33 million liters of diesel consumption daily in the Philippines.

Mr. Abad said the volume could be increased to as much as 3 million barrels, which would be enough to cover up to 15 days of supply, especially after reports that China is asking refiners to halt new export contracts for refined fuel.

“That’s a game changer,” he said, noting that about 30% of the Philippines’ diesel imports come from China. “Hopefully, South Korea will not follow because about 40% of our imports come from South Korea,” he added in mixed English and Filipino.

China has asked companies to stop signing new contracts to export refined fuel and attempt to cancel shipments already committed, according to a Reuters report, citing industry sources.

Mr. Abad said PNOC could buy diesel from nearby suppliers such as South Korea, Japan, Singapore, Malaysia and Indonesia if Chinese shipments are disrupted.

The fuel purchased by PNOC would still be sold to domestic oil companies to ensure continued supply in the local market, he said.

“At best, PNOC may sell the fuel at cost,” Mr. Abad said. “It will simply recover the procurement expenses and distribute the supply to domestic oil companies.”

Global oil supply chains have come under pressure after the closure of the Strait of Hormuz, a critical chokepoint through which roughly a fifth of the world’s oil and liquefied natural gas shipments pass.

The disruption stems from escalating hostilities involving Iran, the US and Israel.

As a net oil importer, the Philippines is particularly vulnerable to fluctuations in global oil supply and prices.

About 98% of the country’s crude oil imports come from the Middle East, according to DoE data, with the remainder obtained from nearby producers such as Brunei and Malaysia.

Fuel retailers have implemented several rounds of price increases this year as global oil prices climbed.

On Monday, oil companies raised gasoline prices by PHP 1.90 a liter, diesel by PHP 1.20 and kerosene by PHP 1.50.

The adjustments marked the 10^th consecutive weekly increase for diesel and kerosene prices and the eighth straight week for gasoline.

Since January, gasoline prices have increased by PHP 6.70 a liter, diesel by PHP 9.40 a liter and kerosene by PHP 7.70 a liter.

Staggered increasese

Energy Secretary Sharon S. Garin said some oil firms have agreed to implement potential increases in pump prices on a staggered basis next week to cushion the impact on consumers.

Oil companies assured the DoE during a meeting on Wednesday that existing fuel inventories remain adequate and that additional shipments previously ordered were on the way, Ms. Garin told DZMM radio.

“We also talked about staggering the increases and the discounts. They seem amenable,” she said.

Tanya Samillano, president of the Independent Philippine Petroleum Companies Association, said oil companies briefed the DoE on their plans for price adjustments and inventory levels.

“We discussed how we plan to implement our price adjustments this coming week and updated the department on our inventories,” she said in a Viber message.

Leo P. Bellas, president of Jetti Petroleum, Inc., said many independent fuel retailers had agreed to stagger price increases if global oil costs continue to climb.

“Almost all nonmajor players agreed to implement the potential increase on a staggered basis,” he told BusinessWorld.

Brigitte Carmel C. Lim, senior vice-president and chief operating officer of Cebu-based Top Line Business Development Corp., said the company supports the DoE’s call for measures that could soften the impact of rising oil prices.

“We will continue to monitor global price movements and regulatory advisories,” she said in a Viber message.

Ms. Garin said the government would determine the scale and timing of fuel price adjustments after assessing global market movements over a full five-day trading cycle.

“We will determine by the weekend because we need five days of simulation to estimate the increase,” she said.

Economists said even staggered fuel price increases could weigh on household spending.

Foundation for Economic Freedom President Calixto V. Chikiamco said spreading out price increases might reduce the shock to consumers but would still erode purchasing power.

“Staggering the increases is slightly better than a one-time price shock,” he said via Viber. “But the total increase is still large and will cut deeply into disposable income.”

IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa said gradual adjustments might soften the immediate impact but would not reduce the overall burden on households.

“The increase is paced but households will still eventually pay the same higher prices,” he told BusinessWorld. — Sheldeen Joy Talavera, Reporter

The government is preparing measures to protect remittance flows and cushion the domestic impact of escalating tensions between Israel and Iran, the presidential palace said on Wednesday, as President Ferdinand R. Marcos, Jr. ordered agencies to safeguard overseas Filipinos and monitor risks to fuel prices and financial markets.

The President is closely tracking developments in the Middle East, particularly their potential effect on overseas Filipino workers (OFW) and remittances, a critical source of foreign exchange for the Philippines, it added.

“President Marcos wants to ensure that Filipinos, both here and abroad, are protected while we brace for market movements caused by the conflict,” Palace Press Officer Clarissa A. Castro told a news briefing.

The heightened alert follows a series of emergency high-level meetings at the palace, including a special Cabinet session convened to address the geopolitical instability.

Central to the administration’s strategy is mitigating inflationary pressures triggered by volatile global crude prices, which threaten the purchasing power of Filipino families dependent on remittances.

Economic managers are weighing interventions to shield the domestic economy from “energy shocks.” Among the most significant is a proposal for the President to seek emergency powers from Congress to reduce or suspend excise taxes on petroleum products.

“One of the options for President Marcos is to talk to the Senate and House leadership to be granted the power to reduce the excise tax on petroleum products as an emergency measure only,” Ms. Castro said.

Under the proposal, this authority would be temporary and triggered by specific price thresholds. While the Tax Reform for Acceleration and Inclusion  law includes certain suspension mechanisms, the palace said these are insufficient for the crisis, prompting the need for an urgent measure.

The Department of Budget and Management said there are undisbursed appropriations and contingent funds worth over PHP 15 billion that could be tapped for fuel subsidies.

“Continuing appropriations from 2025 can still be used until the end of 2026,” Budget Undersecretary Goddes Hope O. Libiran told BusinessWorld via Viber.

She said the Department of Transportation has PHP 2.5 billion in unspent funds from last year. The Department of Agriculture – Office of the Secretary has PHP 25 million remaining for farmers, while the Bureau of Fisheries and Aquatic Resources also has PHP 25 million for fisherfolk.

Sixth most vulnerable

“If additional support is needed, there’s also the PHP 13-billion contingent fund under the 2026 General Appropriations Act,” she added.

The Philippines ranks as the sixth-most vulnerable country globally to rising oil shocks amid Middle East tensions, according to Fitch Solutions unit BMI.

As a net oil importer with a sizable current account deficit, the country faces heightened economic risks from fluctuating energy prices. Only Egypt, Poland, Turkiye, India and China are more exposed.

Rickinder Chima, BMI director and global economist, noted during a webinar that economies heavily reliant on energy imports like the Philippines could experience domestic energy shortages if the Strait of Hormuz were to be closed.

The findings highlight the urgent need for energy and fiscal measures.

The palace assured the public that the country’s oil supply is sufficient to last 50 to 60 days. Should global crude prices hit USD 80 per barrel, authorities are prepared to release fuel subsidies specifically targeting transport, agriculture and fisheries.

Beyond fiscal measures, the government is exploring structural changes to the workweek to conserve energy. Proposals include a four-day workweek and expanded work-from-home (WFH) arrangements.

“The President may study that suggestion, especially if the ongoing Israel-Iran issue becomes more severe,” Ms. Castro said.

‘No wage cuts’

Labor groups expressed conditional support for these plans, emphasizing that any transition must safeguard workers’ rights.

“This must be worker-centered — no wage cuts, no unpaid overtime, no compulsion, with clear occupational safety and health standards, especially for WFH,” Federation of Free Workers (FFW) President Jose Sonny G. Matula told BusinessWorld via Viber.

The FFW is ready to support the government’s energy-conservation push if flexible work arrangements are implemented through dialogue and protect labor standards.

The group called for a tripartite meeting with the government, employers and labor representatives to design safeguards, including wage protection, limits on working hours, voluntary participation, data privacy, occupational safety, the right to disconnect and support for workers unable to work from home.

Analysts said the conflict poses direct risks to the safety and livelihoods of 1 million to 2.5 million OFWs in the Middle East, potentially disrupting workplaces, delaying salaries or prompting repatriation that could dent remittance flows.

“Some OFWs may repatriate voluntarily, and those who remain may face income insecurities,” Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, told BusinessWorld in a Facebook Messenger chat.

“Even if remittances hold, higher global oil prices will reduce the purchasing power of OFW families here,” he added.

Reducing excise taxes could help temper oil prices and curb inflation but may lower government revenues. Mr. Velasco said the government could consider borrowing to fund short-term welfare support for low-income households.

Labor proposals such as a four-day workweek with one work-from-home day are acceptable if they respect worker rights. “These policy proposals are welcome as adaptations to the escalating war,” he said.

Mr. Matula cited the risks from employment disruptions overseas, remittance instability and oil price shocks.

Remittances fund food, transport, tuition, rent and healthcare for millions. If the conflict persists, he said, remittance growth could slow, while higher global oil prices would drive up transport, electricity and food costs.

With 64% of domestic transport reliant on imported fuel, purchasing power would erode further.

Economists said targeted subsidies would be more manageable than universal programs. John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said limited support for transport and agriculture would reduce strain on the budget, unlike broad subsidies that could widen the deficit.

Asian Development Bank economist James P. Villafuerte recommended cash or income support for vulnerable households, saying blanket fuel subsidies often benefit wealthier families and do not encourage energy conservation.

He added that the government could also reprioritize projects, improve budget efficiency or borrow for short-term relief if needed.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the government’s emerging response mirrors measures during prior flare-ups, including the June 2025 Iran-Israel retaliatory attacks and the October 2023 Israel-Hamas conflict.

Authorities are expected to roll out subsidies, targeted assistance and legally mandated mechanisms to cushion vulnerable sectors such as transport operators, fisherfolk, farmers and low-income households.

Beyond short-term relief, he stressed conservation and structural reforms. “Conservation measures for oil and energy, alongside a shift to renewable sources — solar, wind, geothermal, hydroelectric — and more electric and hybrid vehicles, will reduce dependence on imported energy,” he said, noting that sustained investment in energy diversification will strengthen resilience against recurring geopolitical shocks. — Erika Mae P. Sinaking, Reporter and Justine Irish D. Tabile, Senior Reporter with Katherine K. Chan