Philippines inflation in March hits nearly two-year high as Iran war chokes oil supply

The Philippines inflation for March spiked to its highest in around two years as the Iran war strangled energy supply and pushed fuel prices to rise.

Consumer prices surged 4.1% from a year-ago period, the Philippine Statistics Authority stated. This exceeded the median estimate of 3.8% forecast in a Bloomberg News survey and the 2.4% in February.

The Southeast Asian nation is vulnerable to the Iran war because it imports almost all of its oil needs from the Middle East. Oil prices have surged after Iran tightened its grip over traffic through the vital Strait of Hormuz, forcing nations like the Philippines to scramble for supply.

The Bangko Sentral ng Pilipinas has said inflation would likely breach the 4% ceiling of its target range this year. Still, it maintained its policy rate in an off-cycle meeting last month, saying that monetary policy has “limited effectiveness” against supply shocks.

President Ferdinand Marcos Jr.’s government has been trying to blunt the impact of the oil shock by delaying transport fare hikes and negotiating with manufacturers to stabilize costs of basic goods.

With inputs from Bloomberg