The Bangko Sentral ng Pilipinas (BSP) expects the country’s inflation rate to breach its 4 percent target until next year due to consumer price shocks from the Middle East war.
‘The inflation outlook has deteriorated amid the ongoing conflict in the Middle East. Higher global oil and fertilizer prices have begun feeding through to domestic fuel and food prices. At the same time, core inflation has continued to rise, pointing to a broadening of underlying price pressures,’ the BSP said on Thursday.
This was as the central bank announced a 25-basis point increase in its policy interest.
‘The latest BSP projections now indicate a higher inflation path. Average headline inflation is seen to breach the 4-percent tolerance ceiling in both 2026 and 2027,’ it said.
‘Inflation expectations have also risen further, heightening the risk of de-anchoring from the target due to more persistent inflationary pressures.’
In March, Philippine inflation already surged to 4.1 percent, from 2.4 percent in February, as the Middle East war caused oil price shocks and unprecedented local currency depreciation.