Inflation will likely rise to at least 8 percent in May as spillover effects from the Middle East conflict continue to spread across goods and services, according to Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort.
In a Sunday radio interview, Ricafort said a combination of elevated oil prices and lingering geopolitical uncertainty will likely push domestic headline inflation beyond the three-year high of 7.2 percent recorded in April.
“It will still increase. It will increase to at least 8 percent from 7.2 percent in April,” he said.
“Of course, prices of all affected goods and services will go up,” he added.
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. The increase was primarily driven by energy and food-related components, with transport costs rising 21.4 percent and rice prices climbing 13.7 percent year on year amid the ongoing conflict.
Pump prices likewise reached triple-digit levels per liter in April, with diesel, the primary fuel used in public transportation, reaching around P150 per liter.
Ricafort said the continued closure of the Strait of Hormuz due to the conflict remains the main driver behind inflation’s acceleration, noting that countries in the Asia-Pacific region rely heavily on imports passing through the strategic waterway and may eventually need to tap reserve inventories should a peace deal remain elusive.
“It’s still a bit sticky because the Strait of Hormuz is still closed. Twenty percent of the world’s oil and 25 percent of all liquefied natural gas pass through the Strait of Hormuz,” he said.
“It’s been closed since the war began on February 28. It has been closed for almost three months now. Meaning to say, there is no new inventory or supply of oil,” he added.
The sharp rise in April inflation prompted the Bangko Sentral ng Pilipinas (BSP) to raise interest rates by 25 basis points. In a Friday television interview, BSP Governor Eli M. Remolona Jr. signaled that the central bank was considering the possibility of an off-cycle rate hike as price pressures continue to intensify.
“I wouldn’t say likely. We’re considering it,” he said.
The BSP’s Monetary Board, which serves as the central bank’s policymaking body, approved a rate hike on 23 April in response to a worsening inflation outlook during the national energy emergency. The Board had previously convened off-cycle in March to assess the conflict’s impact, ultimately deciding to keep rates steady at the time because spillover effects remained limited.
The BSP earlier said it typically takes around two quarters for spillover effects from a supply-side shock to fully manifest. With the Monetary Board set to convene again on 18 June, Remolona noted that the meeting would come shortly after the release of May inflation data on 9 June, which could heavily influence the BSP’s next policy move given its primary mandate of maintaining price stability.
“So at this point, it’s a toss-up whether we do an off-cycle hike or just wait for the regular meeting, which is not that far away anyway,” he said.
The BSP previously cut interest rates significantly amid low inflation in an effort to support economic growth. Remolona earlier revealed that the central bank had considered a larger 50-basis-point rate hike in April, which would have effectively reversed the last two rate cuts implemented following the fallout from the flood control scandal.
