Middle East war pushes inflation to highest in 20 months

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April 8, 2026 | 12:00am

Spikes to 4.1% in March

MANILA, Philippines — Inflation rose to 4.1 percent in March, its highest level in 20 months, as the intensifying war between the United States and Iran pushed up prices of fuel and other commodities.

In a press briefing yesterday, National Statistician Dennis Mapa said that the headline or overall inflation in March accelerated from the previous month’s 2.4 percent and March 2025’s 1.8 percent.

Last month’s inflation print breached the government’s two to four percent target and the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 3.1 to 3.9 percent for March.

It was also the highest rate of increase since inflation reached 4.4 percent in July 2024.

The uptrend was primarily driven by the transport commodity group covering diesel and gasoline, which rose to 9.9 percent from a 0.3 percent decline in the previous month.

The transport inflation in March was the highest since January 2023 when it reached 11.1 percent.

Diesel and gasoline inflation both hit their highest levels in March since September 2022 when the war between Russia and Ukraine caused oil price volatility.

Diesel inflation surged to 59.5 percent in March, reversing a 1.3 percent decline in February.

Inflation for gasoline also jumped to 27.3 percent in March, a turnaround from the previous month’s 5.7 percent decline.

Mapa said the latest inflation result reflects the impact of the ongoing Middle East crisis.

As the Philippines relies on imports for fuel supply, he said local prices move in line with world market prices.

“Based on the previous years when we had fuel price spikes in the world market, there was an immediate impact on other commodities,” he said.

He said prices of other commodities like food items are affected by the increase in transport and input costs.

Food inflation rose to 2.8 percent in March from 1.6 percent in the previous month, driven mainly by rice prices.

After 14 months of negative inflation, rice inflation rose to 3.6 percent in March.

Housing, water, electricity, gas and other fuels also registered higher inflation of 4.5 percent in March from the previous month’s 3.5 percent.

From January to March, average inflation stood at 2.8 percent.

“The direction (of inflation) for now is that it will continue to increase,” Mapa said.

Moody’s Analytics assistant director-economist Sarah Tan said that the early breach of the inflation target range is concerning as it reflects how quickly the external shocks from the Middle East conflict have filtered into domestic prices.

“With global oil prices likely to rise further in the coming months, inflation could remain elevated and edge higher in the near term,” she said.

While inflation is expected to stay elevated, she said it is unlikely to reach extreme or double-digit levels without a more severe and prolonged shock.

“Timely policy responses, both from the BSP and government to stabilize supply, manage demand and cushion fuel costs should help contain the upside, even if inflation stays above target for now,” she said.

To address the higher inflation and mitigate the impact of the ongoing Middle East conflict on the economy and households, the Department of Economy, Planning and Development (DEPDev) said that the government has put measures in place.

“The government stands ready to address emerging inflation pressures through strategic, well-targeted and time-bound interventions, particularly in fuel, transport and food,” DEPDev Secretary Arsenio Balisacan said.

In particular, he cited the issuance of Executive Order 110 or the Unified Package for Livelihoods, Industry, Food and Transport or UPLIFT Committee that helps the government identify strategic measures.

As part of measures to stabilize fuel supply and ease transport costs, the government has activated the emergency fuel procurement program and secured 165.6 million liters of diesel for delivery this month.

Toll rebates for public utility vehicles and cargo trucks are also being implemented on major expressways.

To ensure adequate food supply, other measures are being implemented to prevent hoarding and artificial shortages.

The government is also expanding the coverage of the P20 rice program nationwide and providing logistics support for the transport of raw agricultural goods.

In addition, the government is providing targeted assistance to vulnerable sectors such as public utility vehicle drivers, farmers and fisherfolk through service contracting and subsidies.