Sharply

It’s official: April’s inflation rate rose more sharply than expected at 7.2 percent. This is nearly two percentage points over the the average forecast of business economists.

The April inflation rate is a major jump over 4.1 percent tracked for the month of March. The month-on-month jump is the highest since the ’90s.

A year ago, the inflation rate in April 2025 was at an incredibly low 1.4 percent. Oil prices were, of course, at their lowest at this time.

BSP forecast an April inflation rate at between 5.6 and 6.4 percent. This took into account the higher oil price regime caused by the US attack on Iran. Yet actual inflation registered significantly higher.

This should be met with alarm.

Inflationary surges driven by supply price spikes tend to cascade over a short period. While it is premature to describe the inflation situation as “runaway,” April’s inflation number should worry us. We could be facing a price explosion in the coming months.

Oil prices are not about to climb down. Donald Trump direly wants to walk away from the war he started. But he does not know how to. He has thrown every threat he could imagine and tried every ploy from imposing his own costly blockade on the Strait of Hormuz to, early this week, attempting to use superior air power to get ships moving out of the Persian Gulf. The last ploy was abandoned within a day.

Tehran knows its capacity for pain exceeds that of the Americans. That is a strategic advantage Iran is using to the hilt. Unfortunately, for the rest of the world, Iran’s admirable political will harms every economy in the planet.

The point is: expensive oil is here to stay for a period longer than anyone dared imagine at the start of hostilities. Expensive oil will, with every passing day, shred supply chains and imperil manufacturing activity.

Each passing day pushes the world closer to a recession. Markets could crash. Companies could go under. Political tensions will multiply. Food will certainly become even more inaccessible for the world’s poor.

We do not see the light at the end of this tunnel we are condemned to pass through because Trump and Netanyahu decide this was a good time to wage war. There is never a good time to wage war. In an tightly interconnected world, the costs of conflict transmit fast.

Credit risk agencies have identified the Philippines as a particularly vulnerable economy. They advise against investing in our capital markets at this time. This is a way of saying Filipinos will endure more challenges in the coming period.

The peso continues to erode. This magnifies the effects of higher oil prices. Given our debt profile, our worsening balance of payments profile, the possible depletion of remittance flows and our dependence on imported food, it is hard to imagine a way for the peso to bounce back. Continued currency depreciation fuels domestic inflation.

As usual, the poor bear greater pain from inflation. It is estimated that for the bottom 30 percent of our people, who spend most of their income on food, inflation is effectively over eight percent.

This episode of high inflation will leave permanent scars. There are reports that many poor Filipino families have stopped supporting their children’s education. Instead of learning, many impoverished young Filipinos are forced to make a living. This magnifies the already well-documented deterioration of our educational system.

Other measures of misery – such as caloric intake – will take a turn for the worse. Under the rule of an irresponsible political elite, life becomes more cruel for less fortunate Filipinos. These carry unhealthy political consequences.

The coming months will be more dismal than usual for most Filipinos. I would love to be more cheerful about our prospects. But that would mean dabbling in fantasy.

By institutional dictate, the BSP will likely continue raising interest rates. For the real economy, this is the equivalent of inducing a seriously ill patient into a coma.

Higher interest rates will slow down economic activity. It will temper bank lending. It will make consumption demand more subdued. It will force business closures.

The disruption will not be momentary. It will be prolonged.

The damage will not be superficial. It could even be structural.

Our government is offering no consolation. We are given no roadmap about how we might expect to return to the path of growth. An “energy emergency” has been declared. That played down the real magnitude of the crisis we confront. We have a full-scale economic emergency on our hands. The inflation rate is merely one metric of many.

The political class seems impervious to the crisis at hand. Our politicians are more consumed by the dynastic wars in progress than in the plight of poor Filipinos. They would rather attempt to settle electoral outcomes today even if elections are two years down the road.

It could be that our people have become completely demoralized – numbed by the sheer irresponsibility of the political players.

It could also be that government has resigned to the thought that it could do nothing about the economic crisis that now engulfs us. This could be the only reason why our leaders have not addressed the people, appraised them of the dimensions of the crisis and offered a package of measures to relieve things.

Our government is lost.