When global shocks push up commodity and energy prices, the effects on food prices do not reach the palengke (wet market) in a straight line. Some price pressures manifest within weeks, while others take months to work their way through costs and supply chains. By the time they reach the palengke, the headlines may have already faded. Yet even if attention shifts, underlying pressures are already building in the production process, long before they become visible in retail prices.
These pressures also do not dissipate quickly. Supply chains do not immediately return to normal when disruptions end. This is most evident in major energy-producing regions like the Middle East, where tensions often extend beyond the initial shock. Adjustment takes time, and cost pressures can linger even when global conditions appear more stable.
The data suggest that the transmission from global price shocks to food inflation is not immediate. In the short term, changes in oil prices do not seem to move food inflation on their own. Instead, their impact tends to show up indirectly through production, transport, and input costs such as fertilizers. As a result, the impact of oil is gradual, unfolding through these channels over time. Food inflation also shows persistence, with past price movements continuing to influence current inflation. It does not jump overnight in response to global shocks, but rather builds over time. Food inflation does not move at a single pace. Rice prices, tend to move more quickly and have a strong influence on food inflation. This is evident in the data, where the rice prices show a strong and consistent relationship with food inflation. As a widely consumed staple with significant import dependence, changes in global rice prices pass through quickly into domestic prices. The peso adds another layer. When the peso weakens, imported food and inputs become more expensive, and these effects usually show up with a delay.
There are also signs that pressures may be building in the supply chain. Global fertilizer prices have risen sharply in recent months, with urea prices rising from around $470 per ton in February to over $700 in March. The increase reflects supply disruptions and higher input costs linked to tensions in major energy-producing regions, including the Middle East. The Philippines sources about a fifth of its nitrogen-based fertilizer from the Middle East, according to the Department of Agriculture.
Because fertilizer prices are set in global markets, disruptions in the region can raise costs more broadly, not just through direct imports. Based on monthly data over the past decade, fertilizer cost pressures tend to show up in production costs with lag of several months, which is roughly aligned with the crop cycle. These costs influence production decisions and show up in food manufacturing costs, and may eventually add to pressures on retail prices, but it takes time. Food inflation reflects a mix of fast-moving and slow-moving forces. What people experience today is largely shaped by movements in staples such as rice, the exchange rate, and the persistence of past price movements, while other cost pressures are still working their way through production and supply chains. This helps explain why food inflation can remain elevated even after global input price shocks begin to ease.
For policymakers, this creates a difficult balance. Monetary policy is more effective when inflation is driven by demand, but less effective when it is driven by supply shocks. While tightening can help anchor expectations, it does not directly address the underlying source of pressure when it originates from external factors.
For households, the message is simple. The lack of a sharp and immediate spike in food prices does not mean underlying pressures are absent. It may mean the adjustment is still underway.