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Pump prices are expected to continue to go up this week, with diesel likely to go above PHP 170 per liter as the Iran war enters its second month.

In separate advisories on Monday, some major oil companies announced a fresh round of hikes with diesel prices set for another double-digit increase starting Tuesday (April 7).

Shell Pilipinas Corp. will raise prices by PHP 19.80 per liter for diesel, PHP 5.90 per liter for gasoline, and PHP 9.10 per liter for kerosene.

Petron Corp. is set to hike diesel prices by PHP 18.80 per liter, gasoline by PHP 4.90 per liter, and kerosene by PHP 8.10 per liter.

Seaoil Philippines, Inc. will implement an increase of PHP 17.95 per liter for diesel, PHP 4.90 per liter for gasoline, and PHP 8.10 per liter for kerosene.

On the other hand, Jetti Petroleum, Inc. will hike prices by PHP 18.60 per liter for diesel and PHP 5.40 per liter for gasoline starting Friday, April 10.

“We believe the delayed implementation will help cushion the impact of the significant increase, particularly on diesel,” Jetti President Leo P. Bellas said in a Viber message.

Other oil firms have yet to announce their respective price adjustments as of press time.

With the latest price hikes, diesel prices may go up as high as PHP 172 per liter while gasoline prices may hit nearly PHP 120 per liter.

The Philippines is a net importer of crude oil and relies heavily on crude supplies from the Middle East, the world’s top oil-producing region that is currently being disrupted by the Iran war. This dependence makes the country highly vulnerable to global crude price swings.

Since the outbreak of the US-Israel attack on Iran on Feb. 28, the increases in diesel prices have already totaled PHP 100.05 per liter, while gasoline and kerosene have surged by around PHP 52.30 and PHP 82.40 per liter, respectively.

These price spikes are partly linked to the ongoing conflict in the Middle East, brought by Iran’s blockage of the Strait of Hormuz, a strategic waterway and critical chokepoint that handles a significant share of global crude shipments.

The Department of Foreign Affairs last week said Iran had agreed to allow Philippine‑flagged vessels to transit the waterway.

While the deal could reduce the risk of fuel supply disruption, Energy Secretary Sharon S. Garin said this would not immediately lower pump prices, as oil prices remain elevated due to geopolitics and global trading conditions.

As of March 27, the country’s average petroleum supply is equivalent to 50.94 days.

Jose M. Layug, a former Energy undersecretary and executive board member of the Philippine Energy Research & Policy Institute, said market pricing would remain volatile as long as the Middle East conflict persists.

“The oil market continues to be volatile and reacts to a drawn-out Middle East conflict. The best long-term solution for the Philippines is still to reduce reliance on the use of oil,” he told BusinessWorld.

Albert Dalusung III, energy transition advisor at Institute for Climate and Sustainable Cities, said the Philippines is not under a dire situation with the supply in place, but warned that prices have little room to decline.

“It’s not dire, but it’s a very difficult situation because we don’t know where the prices will go. As for me, I’m hopeful that this will end, and I hope that we can learn from it,” Mr. Dalusung told ANC’s Headstart on Monday.

He said the Philippines must develop its indigenous resources, such as renewable energy, to reduce reliance on imported energy resources. — Sheldeen Joy Talavera, Reporter

Sharp oil price increases driven by supply disruptions from the Middle East war, along with pricier rice, may have pushed Philippine inflation to its fastest pace in nearly two years, analysts said.   

A BusinessWorld poll of 18 analysts yielded a median estimate of 3.8% for the consumer price index in March, accelerating from the 2.4% in February and 1.8% a year ago.

This is near the upper end of the Bangko Sentral ng Pilipinas’ (BSP) 3.1%-3.9% forecast for the month.

If realized, the headline print would be the fastest in 20 months or since 4.4% seen in July 2024.

This would also mark the third straight month that inflation settled within the central bank’s target.

The Philippine Statistics Authority (PSA) will release the March inflation data on Tuesday, April 7.

“I’m looking at 3.8% for the March inflation print, with most of the acceleration from 2.4% in February coming from transport deflation coming swiftly to an end on the back of the major fuel price hikes seen in recent weeks,” Miguel Chanco, chief Emerging Asia economist at Pantheon Macroeconomics, said in an e-mail.

He said transport inflation likely quickened to 8.5% last month from -0.3% in February.

“On top of this, we’re expecting a further rise in food inflation where low base effects are still doing a lot of heavy lifting,” Mr. Chanco added.

In March, local fuel retailers raised pump prices by double digits as the US-Iran war sent crude oil prices soaring. Pump price adjustments stood at a net increase of up to PHP 43.50 a liter for gasoline, PHP 67.35 per liter for diesel and PHP 70.90 per liter for kerosene last month.

The Philippines is a net importer of crude oil and sources most of its crude oil as well as liquefied petroleum gas supply from the Middle East. This makes the country extremely vulnerable to global crude price swings.

Analysts also attributed the faster headline clip to higher rice prices and electricity rates during the month.

“In addition, higher rice and power prices, coupled with the continued depreciation of the peso, likely amplified imported inflation pressures, especially for fuel, food, and other essential goods,” Maybank Investment Bank economist Azril Rosli said in an e-mail.

“Some offset may have come from softer prices for vegetables, fish, and meat, but overall price pressures appear to have been dominated by energy-led cost increases and second-round effects in services and utilities,” he added.

Based on PSA data, the average cost of local regular milled rice climbed by 5.8% to PHP 48.69 a kilo in the second half of the month from PHP 46.02 a year earlier. The price of well-milled rice went up by 8.02% year on year to PHP 56.68 a kilo, while the price of special rice rose by an annual 3.79% to PHP 64.07 a kilo.

Manila Electric Co. hiked electricity rates by 64.27 centavos per kilowatt-hour (kWh) to PHP 13.8161 per kWh for its customers in the greater Metro Manila area. This meant households consuming 200 kWh monthly paid about PHP 129 more in their electricity bill for March.

Target breach?

Meanwhile, several analysts see inflation potentially breaching the BSP’s target in March, as base effects and elevated prices of rice and other staple foods add to the inflationary impact of oil shocks.

“We forecast March inflation at 4.2% year on year, up from 2.4% in February, mainly reflecting unfavorable base effects and higher food prices, particularly rice and other key staples, amid tighter domestic supply conditions and lingering import‑related cost pressures,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

“Transport and utility costs also likely contributed following recent movements in global oil prices, while core inflation remains relatively stable for now,” he added.

Emerging supply-side pressures could also drive second-round price effects on transport fares, electricity rates and wage-related adjustments, Mr. Asuncion noted.

The BSP wants to keep inflation within the 2%-4% range, with 3% as their point target.

However, the central bank is now expecting the headline print to overshoot the band amid price pressures from elevated oil costs and second-round inflation effects.

If the BusinessWorld poll’s median forecast materializes, headline inflation would average 2.7% as of March, still below the BSP’s revised inflation estimate of 5.1% for the entire year.

Meanwhile, Security Bank Chief Economist Angelo B. Taningco projects inflation to accelerate to 4.4% in March, citing the peso’s slump as one of the drivers.

The peso touched back-to-back record lows last month as uncertainties over the Middle East war took a toll on the local currency.

On Tuesday, the peso closed at a fresh low of PHP 60.748 against the dollar, down 5.8 centavos from its previous record finish of PHP 60.69 on Monday, Bankers Association of the Philippines data showed.

Pause or hike?

Still, most analysts polled by BusinessWorld said the current macroeconomic backdrop calls for a pause at the BSP’s upcoming meeting later this month.

“Easing would risk fueling inflation expectations, while aggressive tightening would weaken growth without addressing the root cause of the shock,” Moody’s Analytics Assistant Director and Economist Sarah Tan said in an e-mail.

“In this context, we expect the BSP to adopt a wait-and-see approach, assessing whether the increase in oil prices proves temporary or sustained. For now, a prolonged pause appears the most realistic path, and we expect the BSP to hold fire at the April meeting,” she added.

However, Security Bank’s Mr. Taningco sees the BSP tightening in a move to temper inflationary pressures.

“We still expect the BSP to raise the policy rate by 25 basis points (bps) to 4.5% at its April 23 meeting,” he said via e-mail. “This is largely in response to March inflation topping the 4% upper bound of the BSP’s target range.”

On March 26, the central bank maintained the key rate at 4.25% in an off-cycle meeting as it sought to soothe markets amid uncertainties arising from the Middle East war.

The BSP last reduced its benchmark rate by 25 bps for a sixth straight meeting in February, extending its easing cycle to a year and a half. It has cut a total of 225 bps since August 2024.

BSP Governor Eli M. Remolona, Jr. said they opted to hold steady as policy adjustments will have little impact on taming supply-driven inflation pressures, adding that tightening may delay economic recovery.

Still, the central bank chief said the Monetary Board will monitor second-round price effects to guide their upcoming policy decisions, with a rate hike likely if the price of crude oil reaches USD 200 per barrel.

The Monetary Board will hold its second policy review this year on April 23. — Katherine K. Chan, Reporter

The Board of Investments (BoI) approved PHP 36.5 billion worth of investment pledges in February, mainly driven by investment commitments in the renewable energy (RE) sector.

In a statement on Sunday, the BoI said February approvals were 27.2% higher than the PHP 28.7 billion recorded in the same month last year.

The number of approved investment projects in February jumped to 21 from the six projects recorded a year earlier.

The BoI greenlit PHP 20.4 billion worth of investment pledges in the RE sector, accounting for 55.9% of the total approved pledges.

By location, PHP 21.5 billion worth of investments will go to Central Luzon, followed by the National Capital Region with PHP 4.2 billion, and the Ilocos Region with PHP 3.5 billion.

In the first two months of the year, the BoI approved 35 projects worth PHP 47 billion, up from the eight projects approved in the same period last year.

Foreign investments during the period surged by 943.4% to PHP 3.1 billion from PHP 300 million recorded last year, which the BoI said signaled “growing investor interest” in the country.

Singapore was the top source of foreign investments as of end-February, accounting for PHP 1.8 billion or 55.2% of the total. This was mainly driven by the 85% Singaporean-owned Intramuros Solar Energy Corp., which pledged PHP 1.7 billion worth of investments.

It was followed by China at PHP 500 million (16.8% of the total pledges), while Canada (6.5%), Australia (6.3%), and the United States (5%) each contributed around PHP 200 million.

The energy sector, which includes RE, accounted for the largest share of approved investments at PHP 22.4 billion or 47.7% of the total in the January-to-February period.

Accommodation and food service activities attracted PHP 7.6 billion in investment approvals, followed by real estate activities (mass housing) with PHP 6.4 billion, manufacturing with PHP 5.3 billion, and transportation and port storage with PHP 3 billion.

Central Luzon received the largest share of approved investments with PHP 21.5 billion as of end-February. This included a PHP 16.4-billion solar power project of Aboitiz-led Cleanergy 2 Power, Inc.

The second-largest recipient of investment pledges was Central Visayas (PHP 8.2 billion), followed by the National Capital Region (PHP 4.5 billion), Ilocos Region (PHP 3.7 billion), and Mimaropa (PHP 2.9 billion).

“The strong increase in BoI-approved projects reflects growing investor confidence in the Philippines and the continued inflow of high-value investments that support our economic priorities,” Trade Secretary and BoI Chairman Ma. Cristina A. Roque said in a statement.

She noted that the uptick in energy-related investments align with the need to boost energy security amid uncertainties in the global oil supply.

“Notably, the significant investments in renewable energy will play a crucial role in strengthening our energy security amid current challenges, while accelerating the country’s transition to a more sustainable and resilient energy future,” Ms. Roque said.

RE accounts for 25% of the country’s energy mix. The Philippines is looking to raise the share of renewables in the power generation mix to 35% by 2030 and 65% by 2050.

BoI Investments Promotion Services Executive Director Evariste M. Cagatan said the latest approvals reflect confidence in the Philippines as an investment destination.

“The increase in BoI-approved projects reflects strong investor confidence in the country’s evolving investment environment, driven by CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy, and our efforts to build a greener and more competitive economy,” she said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said RE‑related investments are expected to account for a bigger share of the country’s investment pledges in the future.

“RE-related pledges have been among the largest foreign investments into the country over the past two years and could still continue, as there is greater imperative for more RE supply to further reduce reliance on imported petroleum products,” he said in a Viber message. — Beatriz Marie D. Cruz, Senior Reporter