Inflation may rise to double digits by the fourth quarter of this year if the Middle East crisis persists, according to Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri Jr.

In a Tuesday commentary, Neri said the inflation outlook remains highly uncertain and largely dependent on how long the conflict—and the resulting energy shock—continues to disrupt global markets.

“The trajectory of inflation remains highly uncertain and will depend largely on the duration of the Middle East conflict,” he said. “However, current projections suggest that inflation is still far from its peak, and it could reach double-digit levels in the fourth quarter if oil prices remain elevated.”

Data from the Philippine Statistics Authority (PSA) showed headline inflation surged to 7.2 percent in April—up 3.1 percentage points from March and four times higher than the end-2025 level of 1.8 percent. Neri attributed the sharp increase primarily to energy and food-related components, with transport costs rising 21.4 percent year-on-year amid the ongoing conflict.

The PSA said food remained the largest contributor to inflation due to its heavier weight in the consumer basket. Rice, in particular, emerged as a key driver.

“Food inflation also picked up pace, driven by rice, fish, and vegetables. Rice prices rose 6.4 percent month-on-month and 13.7 percent year-on-year, pushing the rice price index above its 2024 peak when El Niño severely affected supply,” Neri said.

The April inflation print—the highest in three years—also exceeded most market expectations, including the Bangko Sentral ng Pilipinas (BSP) forecast range of 5.6 to 6.4 percent.

As of press time, global oil prices remain elevated amid the absence of a firm peace agreement between the United States and Iran. Brent crude is trading at around $113 to $114 per barrel, while West Texas Intermediate (WTI) and Dubai crude hover near $106 per barrel—levels that continue to exert upward pressure on domestic fuel and transport costs.

Neri also warned that weather-related risks could compound inflationary pressures. 

“The possibility of an El Niño episode in the second half of the year could push rice prices even higher. There could also be spillover effects into early 2027 if weather conditions turn severe,” he said.

The BSP now projects full-year inflation to average 6.3 percent, well above its 2 to 4 percent target range. Economy, Planning, and Development Secretary Arsenio Balisacan said the country will likely miss its growth target for 2026, similarly due to the economic pressures raised by the energy emergency.