Impact of the US/Israel-Iran Conflict on Prices of Basic Goods and Services

Fuel costs have significantly increased since February 28 as military airstrikes between Iran, Israel, and the US continue. Analysts note that as of March 24, cumulative increases to gasoline prices have totaled around PHP 30 (USD 0.50) per liter, while diesel prices have gone up by around PHP 60 (USD 1) per liter. Rising fuel prices are expected to drive the cost of basic goods and services in the Philippines upwards, particularly on food, transportation, and electricity.

Food

The Department of Agriculture (DA) has monitored slight increases of around PHP 1 to PHP 2 (USD 0.02 to USD 0.03) in the prices of vegetables, meat and poultry, rice, and other agricultural products. These slight price increases were due to higher freight and transport costs, which may continue to increase in the coming weeks. Meanwhile, local varieties of rice are being sold by some local markets between PHP 60 and PHP 67 (USD 0.92 and USD 1.03) per kilo, translating to a PHP 7 to PHP 12 (USD 0.12 to USD 0.20) increase from their prices in late February:

• Dinorado and Ifugao: PHP 67 from PHP 60 (USD 1.12 from USD 1) 
• Santa Rita: PHP 62 from PHP 55 (USD 1.04 from USD 0.92)
• Well-milled local rice: PHP 55 to PHP 50 from PHP 52 to PHP 56 (USD 0.92 to USD 0.84 from USD 0.87 to USD 0.94)
• Regular-milled rice: PHP 45 to PHP 56  from PHP 42 to PHP 50 (USD 0.75 to USD 0.94 from USD 0.70 to USD 0.84)
• Imported rice: PHP 60 from PHP 48 (USD 1 from USD 0.80)

Following coordination with food industry players, the Department of Trade and Industry (DTI) has secured a 30 to 60 day price freeze in the prices of processed food and basic goods, pledged by some manufacturers of these such as canned goods, dairy products, instant noodles, bread, soap, bottled water, candles, among others. While this measure maintains current prices in the short term, analysts note that ongoing cost pressures could eventually lead to future price adjustments.

Transportation

The cost of transportation has also increased primarily due to the increases in fuel prices. From the Department of Energy’s (DOE) latest advisory, diesel prices are expected to spike to around PHP 130 (USD 2.17) per liter while gasoline prices are expected to go up to around PHP 100 (USD 1.67) per liter this week following the latest estimated fuel price hikes from:

• Gasoline: PHP 8 to PHP 12 per liter (USD 0.13 to USD 0.20)
• Diesel: PHP 15 to PHP 18 per liter (USD 0.25 to USD 0.30)
• Kerosene: PHP 12 to PHP 22 per liter (USD 0.20 to USD 0.37)

Amid the high prices of fuel, there is currently no government mandate on fuel purchase restrictions, but some motorists have reported corporate-mandated limits on the number of liters of fuel that can be purchased per transaction. Some gasoline stations reportedly impose a 20-liter or a PHP 1,000 (USD 16.74) cap per vehicle. Nonetheless, government officials are stabilizing the outlook for fuel and food supplies despite anticipated price hikes for basic commodities. To ensure this, they are actively discouraging the public from panic buying or hoarding.

Meanwhile, for public commuters, the supposed transportation fare hike last Thursday, March 19 has been suspended by the government, prompting protests and transport strikes from affected groups and public utility vehicle (PUV) operators. To date, the government implemented fare discounts of 50 percent on Monday, March 23 for major public transportation in Metro Manila such as the MRT and LRT-2 train systems. On the same day, discounts on tollways along the South Luzon Expressway (SLEX) and STAR Tollway will also be granted to select public utility vehicles (PUVs). The government has also allotted a PHP 2.5 billion (USD 41.4 million) fuel subsidy budget for PUV drivers, targeting 245,066 driver beneficiaries and operators. 

As of writing, there remains no clear indication from the government on whether fare and/or wage adjustments will be approved to mitigate these escalating operational costs.

Electricity

Over the next few months, consumers can expect an increase in electricity rates of around PHP 2 to PHP 4 (USD 0.03 to USD 0.07) as early as April, according to the estimates of the operator of the Wholesale Electricity Spot Market (WESM). This translates to around PHP 400 to PHP 800 (USD 6.70 to USD 13.39) increase per 200kWh of electricity consumption. In March 2026, the Manila Electric Company (Meralco) hiked electricity rates by around PHP 0.65 (USD 0.01), translating to a PHP 129 (USD 2.16)  increase per 200kWh of electricity consumption. Energy Regulatory Commission (ERC) Chair Francis Saturnino Juan noted that the price increase is largely driven by high power demand that is usual during the summer season. However, the price increase is further exacerbated by increasing shipping costs of oil, coal, and natural gas that are used for the country’s power plants.

Fuel Supply Outlook

Beyond disruptions through the Strait of Hormuz, the conflict in the Middle East is further exacerbated by the mutual targeting of the Gulf energy production facilities by the US, Iran, and Israel. Consequently, this means that disruptions to the global supply chain of crude oil and liquefied natural gas (LNG) will persist even after hostilities cease as it will take time to repair damaged facilities and return to its optimal performance. As of today’s advisory (March 24) from the DOE, the Philippines currently has a 45-day fuel supply that will last until the second week of May. In particular:

• Gasoline: 53.14 days
• Diesel: 45.82 days
• Kerosene: 97.93 days
• Jet fuel: 38.62 days
• Fuel oil: 61.49 days
• Liquified petroleum gas (LPG): 23.51 days

At present, the government is trying to secure more fuel supplies from countries like South Korea, Japan, Russia, and China. Other steps to augment supply include the Philippine National Oil Company’s (PNOC) procurement of up to PHP 10 billion (USD 166.94 million) worth of oil barrels from the global market.