Factory-gate prices in the Philippines rose at their fastest pace in nearly three years in February, reflecting growing cost pressures in the manufacturing sector.

The Philippine Statistics Authority (PSA) reported on Friday, March 27, that the producer price index (PPI) for manufacturing increased by 1.4 percent year-on-year last February, extending the uptrend in producer prices for the seventh straight month.

Based on the PSA’s OpenSTAT data seen by Manila Bulletin, the annual increase in manufacturing costs last month was the highest since the 2.2-percent growth recorded in May 2023.

The PSA said the manufacture of computer, electronic and optical products—the country’s top export industry—was the main driver of the faster annual growth in producer prices for the month.

This indicates that rising costs are increasingly concentrated in the electronics sector, which accounts for the bulk of Philippine exports and is highly integrated into global supply chains.

PPI measures the average change in prices of commodities produced by the manufacturing sector at the factory gate, providing an indication of price movements before they reach consumers.

The latest PPI data came as headline inflation, or the consumer price index (CPI), rose to 2.4 percent in February, the highest in a year, indicating that price pressures are already building at the consumer level.

The uptick in factory-gate prices could be further aggravated by external developments, particularly the escalating conflict in the Middle East, which has pushed up global oil prices and disrupted supply chains. These developments have prompted the government to declare a state of national energy emergency.

Higher energy costs are expected to feed into manufacturing expenses, including fuel, transport, and key production inputs, potentially sustaining the rise in producer prices in the coming months.