Manila: With oil prices nearing USD100 per barrel due to the Middle East conflict, an economist anticipates inflation rates will surpass the four percent mark this year.

According to Philippines News Agency, economist Michael Ricafort from Rizal Commercial Banking Corporation predicts rising inflation, akin to the situation four years ago at the onset of the Russia-Ukraine conflict.

In January, domestic inflation stood at 2 percent, aligning with the lower end of Bangko Sentral ng Pilipinas (BSP)'s 2 to 4 percent target. February saw an increase to 2.4 percent, a rise anticipated by monetary officials. Experts expect it to exceed 3 percent this year, with Ricafort suggesting it may breach 4 percent due to escalating oil and fuel prices, impacting fares, wages, and other goods and services.

The US benchmark WTI (West Texas Intermediate) is reported at USD98.32 per barrel. Local diesel prices might rise by PHP16.60 to PHP17.50 per liter next week, with gasoline prices increasing by PHP7.50 to PHP8.50 per liter. Ricafort highlights the government's targeted subsidies as a measure to mitigate inflationary effects from oil price hikes, referencing previous administrations' use of similar strategies to balance price impacts while managing budget constraints.

In light of expected inflation acceleration, Ricafort anticipates a repeat of BSP's policy decisions from four years ago, when key rates were continually reduced. He suggests such measures ensure inflation remains within target, despite potential economic slowdown, to maintain long-term economic growth and stability.

In February, the BSP's Monetary Board further reduced central bank key rates by 25 basis points to a three-year low, totaling a 2.25 percentage point reduction since August 2024, as part of efforts to stabilize prices and support economic development.