The World Bank projects PHL inflation to rise 0.62 ppt to a crude move of $20
EVERY $20 increase in the price of raw materials, lasting six months, is expected to increase inflation in the Philippines by 0.62 percent (ppt), the World Bank said.
It added that Thailand was particularly sensitive, with inflation rising by 0.67 ppt for the same move in crude prices.
Thailand and the Philippines are described as “among the most exposed economies given their dependence on imported oil,” the bank said in its East Asia & Pacific (EAP) Economic Update 2026.
Philippine inflation rose to a nearly two-year high of 4.1% in March, breaching the 2-4% target band set by the Bangko Sentral ng Pilipinas, amid rising rice, fuel and electricity costs.
According to the World Bank, Philippines, “increased fuel costs hamper the transportation industry and increase transportation costs and travel costs for businesses and households alike.”
“Higher energy and fertilizer prices are likely to reach food costs and reduce household purchasing power,” it added.
The Philippines is a net importer of oil and gets most of its needs from the Middle East, making it vulnerable to fluctuations in crude prices.
According to the report, inflation in other countries due to the increase in oil prices hurts poor families the most, causing the effect to reverse.
“Household expenditure data from the Philippines … show that the lowest income quintiles devote a disproportionately large share of their total consumption to fuel and related transport costs, making them more vulnerable to electricity price shocks,” it said.
“Across the region, a sustained increase in fuel prices by 50% would result in a 3-4% loss of income to households in the region due to direct and indirect effects,” he added.
After the outbreak of war in Iran in early March, the government declared a one-year national energy emergency to protect the economy from the impact of the crisis.
“The government’s announcement of an energy emergency underscores the seriousness of the situation. Growth is expected to remain below capacity at 3.7%,” the World Bank said.
This projection reflects a reduction in the bank’s January rate of 5.3%.
If realized, the downgraded projection would fall below the post-pandemic low of 4.4% in 2025 and end up missing the Philippines’ 5-6% GDP range for 2026.
The 2026 projection for the Philippines was also below the EAP estimate.
“Growth in developing EAP is expected to reach 4.2% in 2026, as conflict in the Middle East raises prices, trade barriers and economic policy uncertainty remain high, and the development of front-loading of exports before high tariffs ends,” the World Bank said.
Meanwhile, the World Bank raised its GDP growth estimate for the Philippines to 5.6% in 2027 from 5.4% previously.
World Bank EAP Vice President Carlos Felipe Jaramillo said the region’s growth is still outpacing much of the rest of the world, even in uncertain times.
“However, sustaining growth rates requires countries to address structural challenges and seize the opportunity of the digital age to increase productivity and create more jobs,” he said.
The report said artificial intelligence could lead to higher productivity.
However, it said regional uptake remains limited due to gaps in connectivity and skills. – Justine Irish D. Tabile
