MANILA – Falling fuel prices are expected to provide some relief to inflationary pressures in the Philippines, although economists caution that several risks could keep prices elevated in the coming months.
Pump prices have dropped to around PHP70 per liter, significantly lower than nearly PHP150 at the height of Middle East tensions. This week alone, fuel costs were reduced by about PHP9 per liter following easing geopolitical concerns, including renewed US-Iran discussions and the possible reopening of the Strait of Hormuz.
Inflation slowed to 6.8 percent in May from 7.2 percent in April, as earlier spikes in global oil prices began to stabilize. The improvement offers some relief to consumers, as slower inflation helps preserve purchasing power.
Despite this, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort warned that inflation pressures remain in place due to several external factors.
He pointed to the peso’s recent weakness at the 61 level against the US dollar, which raises import costs and could sustain price pressures. Ricafort also flagged possible El Niño conditions extending into 2027, which may push up food prices and overall inflation.
The Bangko Sentral ng Pilipinas (BSP) recently increased its policy rate to 4.75 percent, citing persistent inflation risks. It now projects inflation to average 6.4 percent this year before easing to 4.5 percent in 2026.
Ricafort said inflation could still justify tighter monetary policy if it remains elevated next year, though declining global oil prices may allow for more measured interest rate adjustments.
He added that global monetary tightening trends, particularly from the US Federal Reserve, could influence future policy decisions in the Philippines.
elamigo/xf
