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The Philippines is expected to receive USD 100 million (P5.66 billion) less in remittances next year if US President Donald J. Trump’s “One, Big, Beautiful Bill Act,” which imposes a 3.5% tax on remittances sent by noncitizens, gets congressional nod, according to the presidential palace on Thursday.

The cut is 0.3% of the USD 36.5 billion that overseas Filipino workers (OFWs) are projected to send to their families back home and 0.003% of economic output in 2026, Palace Press Officer Clarissa A. Castro told a news briefing on Thursday, citing estimates by Department of Finance Chief Economist Domini SD. Velasquez.

“Although 41% of the remittances are routed to the US, not all of these are from Filipinos in the US because remittances are routed to the US via correspondent banks,” she added.

Mr. Trump’s controversial bill, which was approved by the US House of Representatives in May, includes a provision imposing an excise tax of 3.5% on money sent abroad by foreign workers in the US. The US Senate is now deliberating on the measure.

Finance Secretary Ralph G. Recto earlier said the legislation, if passed into law in the US, is “a concern” for the Philippines.

Deutsche Bank earlier noted that North and South America account for only 9.8% of OFWs, while the Middle East accounts for around half or 46% of all OFWs.

The Philippines, a labor-exporting country, relies heavily on remittances from millions of OFWs to support domestic consumption and sustain economic growth. These remittances serve as a lifeline for many households and a buffer for the country’s balance of payments.

Cash remittances from OFWs coursed through banks rose by 4% to USD 2.66 billion in April from USD 2.56 billion in the same month a year ago.

In the first four months of 2025, cash remittances went up by 3% to USD 11.11 billion from USD 10.78 billion a year ago.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said the One, Big, Beautiful Bill Act, if passed into law, could reduce Filipino households’ incomes by USD 100 million, leading to lower consumer spending.

Mr. Erece said the decline in dollar inflows would shrink the country’s foreign reserves, limiting the central bank’s ability to intervene in currency markets, especially as it diverges from the US Federal Reserve’s policy path, potentially causing further peso depreciation.

“Less reserves mean less power for foreign exchange interventions and buffer for trade and foreign payment,” he said in a Viber chat.

“Now that the Bangko Sentral ng Pilipinas deviates its monetary policy path from the Fed, the dollar may continue to appreciate against the peso, and having [fewer] reserves means [fewer] resources to manage exchange rates.”

However, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said USD 100 million is “relatively negligible” or “minimal,” in the potential effect on the Philippines’ current account, balance of payments, local foreign exchange market, and on the overall economy of the 3.5% proposed tax.

When asked about the bill’s impact on the Philippines’ dollar reserves, Mr. Ricafort said it will be “all the more negligible or minimal.” — Chloe Mari A. Hufana, Reporter

 

 

Philippine  President Ferdinand R. Marcos, Jr. on Wednesday said the economic fallout from the war between Israel and Iran would be “manageable,” citing stabilizing global oil prices after a ceasefire that eased concerns about the closure of the Strait of Hormuz, a vital shipping lane for the world economy.

“So far, there is no significant effect on the economy,” he told reporters in Capas, Tarlac in mixed English and Filipino, based on a transcript sent by his office.

“We looked at it and analyzed how things might unfold. We saw that the effect on the economy should be manageable. Of course, there would still be some impact if oil prices go up,” he added.

The President met with his economic team on Tuesday to assess the potential fallout from the Middle Eastern war, particularly on energy prices. Economy, Planning, and Development Secretary Arsenio M. Balisacan said the war’s impact was minimal and not alarming.

Brent crude briefly spiked to USD 79 per barrel amid geopolitical jitters but fell back to about USD 69 after US President Donald J. Trump announced a ceasefire, easing concerns over potential disruptions to the critical Strait of Hormuz shipping corridor, Reuters reported.

Brent had settled at its lowest since June 10 and since June 5 for the West Texas Intermediate before Israel launched a surprise attack on key Iranian military and nuclear facilities on June 13.

An oil price rollback is expected next week based on a two-day trading in the global market, Jetti Petroleum, Inc. President Leo P. Bellas told reporters in a Viber message.

“Basically, refined fuel prices tracked the movement of crude oil,” he said. “The decline in prices started with the easing of war risk premium on crude oil following the de-escalation of the conflict.”

Mr. Bellas said global oil prices “further went down” after the ceasefire deal, reducing the risk of supply disruption in the Middle East.

Based on the two-day trading of the Mean of Platts Singapore (MOPS), a benchmark used for refined oil products, diesel prices are expected to fall by PHP 0.80 to PHP 1.10 per liter, while gasoline prices may go up by PHP 0.10 or fall by PHP 0.20 per liter.

Mr. Bellas said the initial indications on domestic price movements could still change, depending on MOPS trading in the next three days.

“While tension has de-escalated, the situation in the Middle East is still fragile but holding so far,” he said. “Crude oil prices could be range-bound in the coming days.”

Mr. Bellas said refined fuel prices in Asia would be subject to “supply-demand fundamentals,” with demand expected to continue rising during the summer season, and supply expected to gradually increase with the return of refineries post-turnaround.

In a statement, the Department of Energy said it had conducted on-site monitoring activities at fuel retail outlets in Taguig City to ensure that consumers receive petroleum products at the right quantity and quality.

It also wanted to ensure that fuel retailers were complying with the staggered price hikes.

The Philippines, a net importer of oil, is highly sensitive to sharp fluctuations in global oil prices.

The government is monitoring signs of price gouging because many have raised prices despite declining global prices.

Mr. Marcos noted that with oil prices stabilizing, the government sees no immediate need to roll out additional fuel subsidies for sectors such as transport, fisheries and agriculture.

He added that assistance in the form of subsidies would only be considered if fuel prices spike again.

“The price of oil has not gone up,” he said in response to transport groups’ call for increased aid. “It went up for one day, then it came back down.”

While assistance programs remained in place, the government said more aid would depend on actual price movements and not short-lived fluctuations.

‘Bigger deal’

Oil companies in the Philippines must keep a minimum 30-day fuel inventory to help stabilize local supply. Should global crude prices breach the $80 per barrel threshold, fuel subsidies for public transport drivers and fisherfolk will be automatically triggered.

Local fuel retailers implemented the first tranche of the oil price increase on Tuesday, while some are implementing the second tranche either on Thursday or Friday.

The total price increase for the week is PHP 3.50 per liter for gasoline, PHP 5.20 for diesel and PHP 4.80 for kerosene.

The Energy department and economic managers are expected to continue monitoring global oil market developments for any signs of renewed volatility.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said the Israel-Iran war is a bigger deal than past wars that involved oil-producing countries, such as the Russia-Ukraine war.

“The Middle East is the major source of the [Philippines’] oil,” he said in a Viber chat. “Although any war involving oil-exporting countries will cause global supply disruptions, the conflict in the Middle East has more direct impacts on our oil supply.”

He said the ceasefire brokered by US President Donald J. Trump is “great news” for the economy and was the key factor behind Mr. Marcos’ assessment that the conflict would have minimal impact on the Philippine economy.

“In the long term, constant geopolitical instability calls [for] the need to diversify trade partners and supply chains, especially for critical goods such as oil,” he added.

Israel launched a surprise attack on Iran early this month, targeting key nuclear and ballistic missile facilities as well as senior military leaders. Washington joined the campaign on Sunday, targeting key nuclear sites in Iran.

Jose Enrique “Sonny” A. Africa, executive director at think tank IBON Foundation, called the government’s assessment “misleading” especially with the rising uncertainty and US involvement in the war.

“That kind of dismissiveness is telling of the lack of strategic thinking about the economy’s basic overdependence on imported energy,” he said via Viber. “The lack of long-term policy action is why these and other similar vulnerabilities will continue.” — Chloe Mari A. Hufana and Sheldeen Joy Talavera, Reporters

 

Filipinos may have to face rising pork prices pending repairs at the San Juanico Bridge, which stretches from Samar to Leyte in central Philippines, and amid rising fuel prices due to the war between Israel and Iran, according to industry players.

Local producers would be forced to pass on to consumers the additional logistical costs of about PHP 4-PHP 6 per kilo of pork due to the bridge disruption, Chester Warren Y. Tan, president at the National Federation of Hog Farmers, Inc., told reporters on the sidelines of a livestock conference on Wednesday.

He said producers must pay for an additional Roll-on, Roll-off (RoRo) vessel to ship hogs from the Visayas to Mindanao, with the cost of each cargo truck averaging PHP 40,000 to PHP 60,000.

Before the bridge repair, they only needed two RoRo vessels to transport the hogs, he pointed out.

“Instead of just two RoRos, it’s now three,” he said in Filipino. “That’s an additional cost of PHP 40,000-PHP 60,000. That’s P4-P6 per kilogram.”

“Right now, producers are trying to absorb [the additional expenses]. But if they can no longer subsidize it, they might pass it on to consumers,” he added.

“That’s a big thing for us,” he said, referring to the logistical expenses that consumers might need to absorb.

Restrictions such as a three-ton load limit have been imposed on San Juanico Bridge, which connects Leyte and Samar provinces in the Visayas, after authorities flagged its decaying structural components.

Only light vehicles carrying loads not exceeding three metric tons may cross one of the Philippines’ oldest bridges. Heavy vehicles including cargo trucks and buses have been banned from using the bridge.

About 1,400 cargo trucks had been crossing the 2.16-kilometer bridge before the disruption.

The limit has prompted the declaration of a state of emergency in Samar province and Tacloban City to prevent any potential price hikes.

After the restrictions, the government ordered the use of alternative routes such as the RoRo route from Calbayog, Samar to Ormoc, Leyte, which takes 12 to 15 hours and costs more.

Mr. Tan said the disruption mainly affecting the transport of goods from the Visayas and Mindanao could also affect pork supply in Metro Manila.

Trade Secretary Ma. Cristina A. Roque on June 18 said freight companies had signified they would not increase delivery rates.

Agriculture Assistant Secretary for Swine and Poultry Michael J. Garcia said rising oil prices amid Israel-Iran war might affect logistic costs for pork products.

Pork Producers Federation of the Philippines President Eric M. Harina said the industry is monitoring the global prices of farm inputs such as feeds.

Pork prices have been rising even before the Israel-Iran war, with the government imposing a maximum suggested retail price (MSRP) for pork in March.

The MSRP was lifted in May on the request of hog players, who are still dealing with the African Swine Fever (ASF).

The Department of Agriculture has said it takes about at least three years to repopulate five million hogs that had been culled due to the ASF.

The agency is set to implement another MSRP for imported or frozen pork in July, which it views as a short-term solution to high prices.

“The Iran-Israel war has caused a sharp appreciation of the US dollar,” Jesus C. Cham, president of the Meat Importers and Traders Association, said in a Viber message. “This will result in higher landed costs.”

Agriculture Secretary Francisco Tiu Laurel, Jr. earlier said the MSRP would depend on the exchange rate and freight costs.

Mr. Tan said the prices of pork would stabilize once local production improves.

“We encourage our local farmers to produce more, to expand more,” he said. “In that case, if we have more production, our cost to produce will be lower and automatically, prices will be lower.” — Kyle Aristophere T. Atienza, Reporter

The government is negotiating for lower tariffs and forging free trade agreements (FTA) to build a robust automotive supply base, according to the Philippine Economic Zone Authority (PEZA).

“This includes strategic efforts such as negotiating more favorable tariff regimes under Most-Favored Nation (MFN) terms [and] attracting key manufacturers looking to diversify from China under the China +2 strategy,” PEZA Director-General Tereso O. Panga said in a statement on Wednesday.

The Philippines is also expanding its free trade agreement network with key economies like the European Union, India and Canada, the PEZA chief said.

He said the agency is in talks with car companies from India, Taiwan and China.

Last week, the Philippines and European Union finished the third round of negotiations for an FTA in Brussels. The next round is scheduled for October.

Philippine lead negotiator and Trade Undersecretary Allan B. Gepty earlier said there was good progress in text-based negotiations in the third round, a sign that the parties could conclude the talks before the end of President Ferdinand R. Marcos, Jr.’s term.

PEZA said that there were 68 car companies hosted in economic zones (ecozones) as of end-2024, accounting for P100 billion in investments and generating more than 50,000 jobs.

“This performance reinforces the automotive sector’s enduring contribution to national industrial growth and the strength of PEZA’s facilitative ecosystem,” it said.

On June 20, PEZA took part in the 26th regular update meeting of the Toyota Special Economic Zone, during which locators operating in ecozones shared a positive outlook for this year.

The Toyota ecozone is home to Toyota Motor Philippines Corp.’s (TMP) production facility, along with other locators and export suppliers from the Toyota Group, which have investments worth more than P18 billion.

As of May, the ecozone in Sta. Rosa, Laguna had generated 3,208 jobs, while exports reached $87.167 million in the first five months.

“TMP’s approach of embedding its supply chain in the Philippines mirrors PEZA’s own vision of cultivating ecosystems within its ecozones, where manufacturers and their downstream partners can operate seamlessly and competitively,” PEZA said.

“With this enabling support, TMP is bullish about their continued growth in the Philippines, given the strategic importance of the country being Toyota’s 10^th-largest global market and fifth-largest market in the Asia-Pacific region,” it added.

Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said attracting car companies would help generate local jobs.

However, the Philippines should work on making its business environment more competitive by addressing issues in the “ease of doing business, power, logistics and labor costs,” he said in a Viber message.

“I would also suggest efforts be put into attracting the supply chains supporting the automotive sector, such as die casting, three-dimensional printing parts and metal machining, among others,” he added.

Ferdinand I. Raquelsantos, president of the Philippine Parts Makers Association, said the Philippines could attract investments in the car sector “if the government will give much better incentives compared with what Thailand, Indonesia and Vietnam provide.”

“These could include free manufacturing land, low corporate taxes and ease of doing business,” he said in a Viber message. — Justine Irish D. Tabile, Reporter

Philippine economic growth likely picked up in the second quarter, supported by stable inflation and improved labor market conditions, the University of Asia and the Pacific (UA&P) said.

In its latest The Market Call released on Monday, UA&P said economic indicators have turned “slightly more positive,” and expects the gross domestic product (GDP) to expand by 5.6% in the second quarter from the 5.4% growth in the first quarter.

Year on year, this would be slower than 6.5% in the second quarter of 2024.

It would also be below the government’s target range of 6-8% for this year.

“Below floor (2%) year-on-year inflation from March to May, acceleration in infrastructure spending and higher employment should enable consumers to spend more,” it said.

Inflation cooled to an over five-year low of 1.3% in May, as utility costs rose at a slower pace. This brought the five-month average to 1.9%, slightly below the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target band.

Data from the Philippine Statistics Authority showed around 650,000 new jobs were created in April, bringing the number of employed Filipinos to 48.67 million. However, the unemployment rate increased to 4.1% in April from 3.9% in April 2024.

UA&P noted consumer spending likely strengthened in the second quarter despite a negative consumer outlook.

The latest BSP Consumer Expectations Survey showed Filipino consumers turned pessimistic for the second quarter but kept an optimistic outlook for the next 12 months.

UA&P said ongoing infrastructure projects likely accelerated spending by the National Government in May.

“The external outlook showed signs of modest improvement and should not pull down domestic demand expansion,” it added.

Further easing

UA&P expects the BSP to deliver another 25-basis-point (bp) rate cut in the third quarter.

“Another BSP cut is likely in Q3 if crude oil prices prove transitory or moderate,” it said.

Last week, the Monetary Board cut the target reverse repurchase rate by 25 bps to 5.25% from 5.5% amid a moderating inflation outlook and weaker growth.

UA&P said the US Federal Reserve may delay its own rate cuts to later this year.

“We expect peso depreciation as BSP’s and Fed’s policy rate decisions diverge, along with the worsening Israel-Iran conflict,” it said.

BSP Governor Eli M. Remolona, Jr. earlier signaled that a rate cut in August was on the table depending on the data and a further escalation in the Middle East conflict.

Meanwhile, GlobalSource Partners Country Analyst Diwa C. Guinigundo said the BSP was “well-justified” in its decision to cut rates as inflation continues to slow.

“Its decision to reduce its policy rate for the second time not only reflected its large monetary space but also its assessment that risks have yet to materialize,” he said in a report dated June 23.

He also noted the weaker-than-expected growth in the first quarter “could be supported by dovish monetary policy.”

“With its nimble performance in terms of assessment and appropriate action, the BSP is expected to deliver another rate cut in the second half of 2025, actual data permitting,” he added.

Mr. Guinigundo also noted that the possible impact of rising oil prices triggered by the escalating war in the Middle East was “too real to ignore.”

“Another point to consider is what could happen to the differential between the BSP’s policy rate and the US Fed Funds rate. Current dynamics seems to suggest that if the differential falls below a hundred basis points, some capital outflow could ensue and lead to a weakening of the peso,” he said. — Aubrey Rose A. Inosante

S&P global ratings expects the Philippines to be the second fastest-growing economy until 2027, as it raised its growth projections.

In its Economic Outlook for Asia-Pacific, S&P Global Ratings said Philippine gross domestic product (GDP) will likely expand by 5.9% this year from 5.7% previously.

For 2026, it expects Philippine GDP to grow by 6% from 5.9% previously.

S&P Global Ratings now projects Philippine GDP growth at 6.6% in 2027 from 6.4% previously.

Based on S&P’s latest projections, the Philippines and Vietnam will post the second-fastest expansion in Asia-Pacific this year until 2027.

India is expected to lead the region, as its GDP is projected to grow by 6.5% this year, 6.7% in 2026 and 7% in 2027.

For 2028, S&P Global Ratings said Philippine GDP will likely expand by 6.5%, the third-fastest in the region after India (6.8%) and Vietnam (6.6%).

“(The) upward revision from our forecasts published in May was driven by the sharp reduction of bilateral tariffs between the US and China, which came after the pause in the country-specific ‘reciprocal’ tariffs by the US. These somewhat reduced the downsides around global trade and growth,” S&P Global Ratings Senior Lead Economist Vincent Conti told BusinessWorld in an e-mail.

US President Donald J. Trump announced higher reciprocal tariffs on most of the country’s trading partners, with Philippine goods facing the second-lowest rate in Southeast Asia at 17%.

However, the reciprocal tariffs have been paused for 90 days until July. A baseline 10% tariff remains in place.

“We nevertheless expect global trade uncertainty to be substantially higher than before January, and that would in turn provide a key headwind for investment in the Philippines,” Mr. Conti added.

S&P Global Market Intelligence Principal Economist Harumi Taguchi said the direct impact of the US tariffs on the Philippine economy is still “relatively smaller” compared with other Asia-Pacific economies.

“The magnitude of impact, including the indirect impact, depends on these scenarios. In any case, this tariff will slow global economic growth and disrupt the supply chain,” she said on Money Talks with Cathy Yang on One News.

Meanwhile, S&P Global Ratings sees the Philippines’ benchmark rate ending at 5% this year, which implies another 25-basis-point (bp) cut by the central bank this year.

“With inflation not a major risk, more focus on growth risks and external factors unlikely to significantly constrain monetary policy easing, we expect Asia-Pacific central banks to continue to cut policy rates,” it said in a report.

Last week, the Bangko Sentral ng Pilipinas (BSP) reduced the target reverse repurchase rate by 25 bps to 5.25% from 5.5% amid a moderating inflation outlook and weaker growth.

The Monetary Board’s remaining policy meetings this year are scheduled for Aug. 28, Oct. 9, and Dec. 11.

S&P Global also expects Philippine inflation to average 2.3% this year, within the 2-4% target. It also projects inflation to settle at 3.2% in 2026, 3.3% in 2027 and 3% in 2028.

The BSP forecasts inflation to average 1.6% this year, 3.4% in 2026 and 3.3% in 2027. — Aubrey Rose A. Inosante, Reporter

The ongoing Middle East conflict has had a “minimal” impact on the Philippine economy, the government said on Tuesday.

On the other hand, analysts said that another surge in global oil prices may trigger a renewed spike in inflation in the Philippines.

“The impact is so minimal on our economy that it doesn’t seem alarming as of now, as long as [global oil prices] don’t increase or the conflict worsens,” Department of Energy Officer-in-Charge Sharon S. Garin said, quoting the assessment of Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan.

President Ferdinand R. Marcos, Jr. on Tuesday held a meeting with economic managers to discuss the ongoing Middle East conflict.

“The President’s order is still that we make sure that we protect the Filipino people from the impact of the oil price hike, meaning, most especially those who use public utility vehicles, our farmers, and our fishermen,” Ms. Garin added.

The Philippines, a net importer of oil, is highly sensitive to sharp fluctuations in global oil prices.

“Oil prices are a significant contributor to inflation in the Philippines. Our analysis suggests that a 10% oil price shock contributes 0.3-0.4 percentage point (ppt) to headline consumer price index, all else equal,” Krisjanis Krustins, Asia-Pacific Sovereign Ratings director at Fitch Ratings told BusinessWorld.

However, the “final impact” of the war will rest on the duration and size of the oil price shock, Mr. Krustins said.

After surging on Monday, oil prices fell after US President Donald J. Trump announced a ceasefire between the Iran and Israel. Reuters reported that oil prices duly slumped almost 3% on Tuesday, on top of an almost 9% tumble overnight as the immediate threat to the vital Strait of Hormuz shipping lane appeared to have lessened.

US crude futures are back at USD 66.80 per barrel, about the lowest since June 11 before Israel’s attacks on Iran began.

“Likely to speed up inflation, as we import oil primarily. Oil, being a production input that links to many other industries, can trigger price increases down the line,” Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes told BusinessWorld.

Inflation cooled to an over five-year low of 1.3% in May, as utility costs rose at a slower pace. This brought the five-month average to 1.9%, slightly below the BSP’s 2-4% target band.

S&P Global Market Intelligence Principal Economist Harumi Taguchi said inflation could settle to 2.3% in the second half and less than 2% for the full year.

“The situation is still uncertain, but assuming the oil prices stay around the current USD 75 per barrel and the peso remains at the current level through this end of the year,” Ms. Taguchi said in an interview on Money Talks with Cathy Yang on One News on Tuesday.

If oil prices surge to over USD 100 per barrel, inflation will likely accelerate to over 4% in the first half of 2026, she said.

The Bangko Sentral ng Pilipinas (BSP) last week slashed its inflation forecast to 1.6% for this year from 2.4% but noted that higher oil prices could add to inflationary pressures.

BSP Governor Eli M. Remolona, Jr. earlier warned that rising global oil prices and the weakening peso could bring inflation to 5%, breaching the 2-4% target range.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort projected a 0.5-0.7-ppt increase in inflation if crude oil prices remain elevated.

“The resulting higher local fuel pump prices would lead to higher prices of other goods and services, passing the effects of higher world crude oil prices and weaker peso recently, thereby could lead to some pickup in overall inflation,” he said in a Viber message.

Local fuel retailers implemented the first tranche of the oil price hike on Tuesday, while some firms are implementing the second tranche either on Thursday or Friday.

The total price increase for the week is PHP 3.50 per liter for gasoline, PHP 5.20 per liter for diesel, and P4.80 per liter for kerosene.

ANZ Research said the Philippine inflation will likely see a 0.1% uptick in the near term, citing oil’s relatively low weight in the Philippine CPI basket at 2.4%.

“While the Philippines and mainland China have seen a larger rise in pump prices, vehicle fuels make up a smaller share of their inflation basket,” it said in a note.

Mr. Ricafort also warned that the biggest risk for global crude oil supply is the disruption in the Strait of Hormuz, where 20% of the world’s supply passes through.

GlobalSource Partners Country Analyst Diwa C. Guinigundo said a sharp increase in petroleum prices could trigger higher prices for food and nonfood commodities.

“If JPMorgan’s oil price forecast of between USD 120 and USD 130 per barrel materializes over a prolonged period, it’s likely that we see a breach of the 2-4% inflation target,” Mr. Guinigundo told BusinessWorld.

The former BSP deputy governor also said second-round effects may be felt such as higher wages and transport fares.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the crude oil price trend is “not yet explicitly inflationary,” noting Brent crude remains 9% lower year on year.

“Reassuringly as well, oil futures still point to prices starting to calm down from September onwards,” he said.

He also said the risks to inflation globally, and not just the Philippines are now skewed to the upside.

“The good news from the Philippines’ standpoint is that it can arguably tolerate a rise in oil prices and, by extension, transport prices (etc.), given how low headline inflation has sank this year,” he said.

The Philippine Statistics Authority is set to release June inflation data on July 4, but analysts said the impact of the latest oil price spike will likely to be felt in the next two months.

‘Worse’ than Russia-Ukraine war

Mr. Peña-Reyes warned that the inflationary impact could be similar or “possibly worse” compared to the Russia-Ukraine war, which started in 2022.

During the onset of the war in late February, Philippine inflation spiked to 4% in March followed to 4.9% in April. It further stretched to 8% levels in November and December.

“It’s possible to see a similar situation that we saw during the Russia-Ukraine if this war is escalated with both the participation of Europe aside from the US as well as those more sympathetic to Iran like China and Russia,” Mr. Guinigundo said.

He also anticipated some retaliation that may set off a “train of global uncertainties and volatilities.”

“The 35% increase in global prices in 2022 took place over five months and was from a higher base of around USD 80/barrel,” IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa said.

“Even though we’re starting from a lower base now, the current situation is, however, many times more alarming because the turmoil from the US-Israel-driven conflict is escalating in the major oil-producing region of the Middle East.”

Mr. Africa also recalled that oil prices doubled during past regional conflicts, such as the Iran-Iraq War, the Gulf War, and the US invasion of Iraq.

“If the week-long surge extends into months because of continued US-Israeli aggression, it is not unlikely to see another doubling of oil prices to USD 130 or more with huge effects on domestic inflation and further second-round effects from greater global economic turmoil,” Mr. Africa said.

He criticized short-term government measures like fuel subsidies as insufficient, urging structural reforms to reduce dependence on imported oil and food. — Aubrey Rose A. Inosante with Chloe Mari A. Hufana