BSP: Sustained $100 oil to drive up 2027 inflation
Inflation could reach 6.6 percent next year if Dubai crude oil prices stay at $100 per barrel, with further increases in energy costs threatening to prolong price pressures even as economic growth weakens, according to the Bangko Sentral ng Pilipinas.
The Bangko Sentral ng Pilipinas (BSP) warns that sustained oil prices at $100 per barrel could push inflation to 6.6% next year in the Philippines, with even higher inflation of 7% possible if crude prices jump to $110 per barrel by 2027, according to the bank's August Monetary Policy Report. While the base forecasts project inflation at 6.1% this year, 5.4% in 2027, and 3.3% in 2028, assuming oil prices of $81, $75, and $72 per barrel, respectively, the bank estimates that oil prices staying at the higher levels from September could lead to persistent price pressures.
Inflation is expected to peak in Q4 2027 and remain above the 2-4% target band through Q3 2027. The probability of average inflation exceeding the upper end of the target band in 2027 is estimated at 81.6%, while the likelihood of it settling within the band is only 16.8%. The BSP's baseline outlook also accounts for other factors that could contribute to high inflation, such as supply shortages, higher transport fares, the escalation of the Middle East conflict, and agricultural disruptions from El Niño.
In a worst-case scenario, a severe El Niño episode could raise domestic rice prices by about 40% and corn prices by 25% within a 12-month period, further pushing inflation above the 3% target.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
