Inflation roared to 7.2% in April, the highest in three years, as the US-Israel war with Iran crippled oil supplies through the Strait of Hormuz and hammered the Philippine economy.
The Philippine Statistics Authority reported the consumer price index surged from March’s 4.1%, smashing the Bangko Sentral ng Pilipinas’ (BSP) forecast of 5.6% to 6.4%. President Ferdinand Marcos Jr. responded Tuesday with Executive Order No. 110, declaring a national energy emergency.
War-Driven Fuel Crisis Takes Toll
The conflict, which erupted on February 28, shut the vital strait that carries 20% of global oil. The Philippines, importing 98% of its crude from the Middle East, faced immediate pain. Fuel prices have spiked repeatedly, driving up transport (up 12.3%), food (8.1%), and electricity (9.7%) costs.
The peso cratered to a record 61.567 per dollar on April 29, from 57 at war’s outset, as capital fled to safe havens. Brent crude now trades above $85 per barrel, with analysts warning of $125 spikes if tensions persist.
Manufacturing Slumps Sharply
The S&P Global Philippines Manufacturing PMI plunged to 48.3 in April from 51.3 in March, signaling contraction for the first time in five months. New orders fell at the fastest pace since August 2021, hit by weak exports and soaring input costs, the sharpest since December 2022.
“Manufacturers entered Q2 with sharply worsening conditions,” said Maryam Baluch, S&P Global economist. Energy and shipping costs, tied to the war, drove the pain.
Grim Outlook Looms
Forecasts darken further. University of Asia and Pacific’s Victor Abola sees a July peak at 6.5%, while BSP targets 6.3% for 2026, double the 2%-4% band. DBS and First Metro project $85-$90 oil averages through year-end.
After 2025’s tame 1.7% inflation, stagflation fears mount: prices soaring while growth stalls. The peso’s slide and industrial woes compound household squeezes, with rice up 15% and diesel nearing ₱80 per liter.
BSP Governor Eli Remolona Jr. hinted at tighter policy, but rate hikes risk choking fragile recovery. “We’re navigating uncharted waters,” he said Tuesday.
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