The Marcos administration risks seeing inflation surge past its four percent ceiling to nearly five percent this year unless it intervenes through measures such as cutting fuel excise taxes, according to the government’s top economic planner.

Economy, Planning, and Development Secretary Arsenio Balisacan told lawmakers on Tuesday, March 10, that persistent hostilities between the United States, Israel, and Iran are choking global oil supplies.

Without proactive government measures, Balisacan said the price shocks are expected to drive domestic consumer price increases well beyond the government’s target range of two percent to four percent for 2026.

“For the entire 2026, inflation would exceed the government’s target of two to four percent and could reach close to five percent if this scenario materializes,” Balisacan told reporters.

Under a modest stress-test scenario in which crude oil hits $100 per barrel, Balisacan estimated that inflation could rise to 5.1 percent by the end of the first quarter.

Such a spike would likely shave approximately 0.2 percentage points off the country’s economy, as measured by the gross domestic product (GDP).

However, the he also outlined a more severe “doomsday” projection. Should global oil prices reach $140 per barrel, domestic inflation could skyrocket to as high as 7.5 percent.

In this environment, the drag on economic output would intensify, potentially trimming growth by 0.3 percentage points as high energy costs filter through the manufacturing and transport sectors.

Balisacan told reporters on the sidelines of DEPDev’s event on Tuesday, March 10, that the government is “mobilizing resources and efforts to mitigate the effects of inflation and oil price escalation.”