Inflation rate in the Philippines could exceed 5 percent if global oil benchmarks, particularly Dubai crude, reach $100 per barrel and the peso sharply depreciates, the Bangko Sentral ng Pilipinas (BSP) said Friday.
BSP Governor Eli Remolona Jr. said “oil is one of the big risks that we worry about.”
“We have a bad scenario, if I may call it that, in which our inflation rate could go up to, could exceed 5% but we hope that doesn’t happen,” Remolona said in an interview with Money Talks.
“We’re carefully watching that. Our good scenario, our I would say our central scenario says inflation will go up to around 3.4 percent,” he said.
Remolona linked the concerning scenario to the combined effect of Dubai crude hitting $100 per barrel and a significant depreciation of the peso.
“Those two combined would have a very big effect on our inflation,” he said.
Data showed that as of June 19, 2025, Dubai crude oil was priced at $76.91 per barrel.
The BSP adjusted its inflation forecast for 2025 to 1.6 percent from 2.4 percent, before the oil price surge due to the Middle East conflict.
Forecasts for 2026 was raised to 3.4 percent from 3.3 percent, and for 2027 to 3.3 percent from 3.2 percent.
The Philippine Statistics Authority (PSA) earlier reported that the inflation rate slowed to 1.3 percent in May from 1.4 percent in April, bringing the five-month average to 1.9 percent.
Remolona said if the “bad scenario” does not materialize, the BSP’s Monetary Board would continue to cut the policy rate.
The BSP recently reduced its overnight borrowing rate by 25 basis points to 5.25 percent.
The adjustment also led to changes in the interest rates on the overnight deposit and lending facilities, which are now at 4.75 percent and 5.75 percent, respectively.
