How do global events like oil price shocks or international conflicts affect inflation in the Philippines
Answer (1)
Global events like oil price shocks, wars, or supply chain disruptions can have a big impact on inflation in the Philippines, even if these events happen far from our shores. This is because we live in a globalized economy, where prices and supplies of goods are connected across countries.For example, when the Russia–Ukraine war began in 2022, global oil supply was disrupted because both countries are major producers of oil and natural gas. This caused international oil prices to rise sharply. The Philippines, which imports most of its oil, had to pay more to bring in fuel. As a result, the price of diesel, gasoline, and cooking gas increased.But it doesn’t stop there. Since fuel is used in transportation and electricity, almost every other product—like food, school supplies, clothing, and even medicines—became more expensive too. That’s how global events cause imported inflation in the Philippines.Another example is when China locked down cities during the COVID-19 pandemic. China is one of the world’s biggest exporters. When factories and ports closed, global supplies of electronics, machinery, and even ingredients for food or medicine were delayed. In the Philippines, delivery of imported goods slowed down, and scarcity made prices go up.In 2023, El Niño also affected global rice supply. Since the Philippines still imports rice from Vietnam and Thailand, a lower supply meant higher prices locally. This shows how climate events abroad can affect our inflation too.In response, the Philippine government can reduce import taxes, release rice from the National Food Authority (NFA), or offer fuel subsidies. The BSP may raise interest rates to reduce local demand and stabilize prices.In summary, global shocks create local inflation through supply disruptions and higher import costs. That’s why managing inflation in the Philippines requires both domestic action and awareness of what’s happening globally.
