With headline inflation accelerating more than expected in March, Frankfurt-based Deutsche Bank AG warned that spillover effects from rising energy costs could soon start to surface across other sectors of the local economy.

Deutsche Bank Research noted in its April 10 report that in the Philippines, “transmission was faster and more severe than we expected,” particularly within the energy sector. This referred to the domestic spillover of surging global oil prices caused by the Middle East conflict.

March inflation jumped to 4.1 percent, breaching the tolerance band of two to four percent set by the Bangko Sentral ng Pilipinas (BSP). This also marked the fastest price growth in nearly two years.

Fuel inflation alone spiked by nearly 40 percent on a month-on-month, seasonally adjusted basis. Deutsche Bank Research described this as a “faster and more severe-than-expected first-round transmission.”

With these initial impacts already being felt by Filipino consumers, Deutsche Bank Research flagged looming broader economic consequences.

“We expect second-round spillover effects on inflation to soon emerge,” Deutsche Bank Research said, noting that this pattern is similar to previous oil shocks observed in the Philippines.

Second-round effects typically occur when high energy costs begin to inflate the prices of other goods and services, such as transport fares and food production.

Furthermore, Deutsche Bank Research expressed caution regarding the immediate relief offered by proposed policy shifts.

While fuel excise tax cuts are being considered to cushion the impact of the crisis, the lender said their effects “may only be felt a month (or longer) after implementation, as they would apply only to new fuel imports, while excise-paid inventory needs to be run down.”

This domestic situation mirrors the regional trend, as most Southeast Asian economies are experiencing significant first-round effects from the global oil shock.