United Overseas Bank: Middle East conflict drives Philippine inflation above expectations

According to Golden Ten Data on April 7, due to higher-than-expected inflation in the Philippines in March and continued disruptions caused by the Middle East conflict, UOB economists have raised their full-year CPI forecast for the Philippines. Economists Julia Goh and Loke Siew Ting wrote that base effects and a weakening peso may amplify price pressures. They forecast an inflation rate of 5.5% for 2026, up from the previous forecast of 3.0%. Nevertheless, the central bank may currently overlook supply-driven shocks and keep the policy rate at 4.25% in April. Considering that the economy is still recovering from the impact of public works-related scandals and it remains unclear how long the Middle East conflict will last, UOB expects the Philippine central bank to prioritize maintaining growth and employment in the short term.