Research group IBON warned that rising oil prices amid escalating conflict in the Middle East threaten to further erode Filipinos’ already weak purchasing power.
The group noted that inflation had already inched up to 2.4% in February 2026 from 2.0% in January, indicating building price pressures on Filipino households, especially those with low incomes. Rising costs of food, housing and utilities were key drivers of the increase, which have disproportionate impacts on poor and low-income families.
Major oil producers have cut supplies as tensions escalate in the Middle East, including US-Israel attacks on Iran. IBON stressed that the Philippines is extremely vulnerable to global price shocks, importing around 95% of its petroleum requirements. Of this, 75% are refined petroleum products, while 25% are crude oil. Ninety-eight percent of crude imports come from the Middle East.
Global oil prices have already jumped by about 25%, the highest since mid-2022. Department of Energy Secretary Sharon Garin said local fuel prices could rise by Php17 to Php24 per liter. This comes after 11 straight weeks of increases for diesel and kerosene, and nine consecutive weeks for gasoline.
Whether imposed all at once or in staggered adjustments, such large fuel price hikes will hit consumers hard. IBON said these will quickly translate into higher transport, electricity, production and food costs. A Department of Economy, Planning and Development simulation has reportedly projected inflation could accelerate to 6.3% to 7.5% in March and the coming months under extreme scenarios. Under this situation, the national average purchasing power of the peso which is already at just Php0.79 at present—could fall to Php 0.74 and even further to just Php 0.73.
Many Filipinos’ meager incomes will not keep pace with the rising cost of living driven by higher fuel prices. The Php504 average nominal minimum wage across the country’s 17 regions already falls far short of the estimated Php1,258 average family living wage (FLW) as of February 2026. This could rise further to Php1,303 and up to Php1,317 under the extreme scenario inflation scenario.
The government needs to decisively implement measures to control prices, IBON said. These include permanently removing value-added tax (VAT) and excise taxes on oil, subsidizing small producers, and raising wages. The Oil Deregulation Law (ODL) should be scrapped to restore state control and curb excessive, monopolistic pricing by big oil firms.
