I may have to eat humble pie if the Philippine peso weakens to ₱60 to the United States (US) dollar or above for a prolonged period in 2026. I have been cocksure that “the Philippine peso will not be a ‘senior citizen’ any time this year.” I had predicted the exchange rate would remain at ₱59 to $1 for the duration of the year, reasoning that the Central Bank has more than enough dollar reserves to protect the local currency from depreciating beyond the psychological barrier of ₱60.

It is now obvious that this barrier has been breached. The situation currently hinges on how quickly President Trump can de-escalate the conflict in the Middle East. If the war continues for more than a month, we can expect the peso to trade within the 60.00 to 60.50 levels in the near term. Should a de-escalation occur, the peso could quickly return to the sub-60 level, as it has teased in recent days.

Those who take a more pessimistic view of oil prices remaining above $100 a barrel point out that even if the war ceases and the Strait of Hormuz reopens, the destruction of petroleum-producing facilities has been so massive that it will take time for global supply to normalize. Even if the price of oil dips below $100, it is expected to hover in the high eighties or nineties throughout 2026.

Filipino consumers should prepare for food inflation that could rise as high as six percent, resulting from sustained high fuel prices, rising transport costs, and increased fertilizer expenses that reduce the supply of basic food items. The Government must prepare for a “severe shock scenario” where oil remains above $100 per barrel. In this case, food inflation could soar to six percent to eight percent. This could happen if the Middle East conflict is prolonged, leading to supply disruptions compounded by a further weakening of the peso.

As a feature article in the March 27, 2026, issue of the Financial Times headlined:

“From Minnesota to Punjab, fertilizer costs are up and harvests are set to be hit due to halts in production and disruption to key shipping routes. This is a particularly grave concern for the world’s poorer nations.”

As of early 2026, Philippine food inflation remains relatively low at 1.6 percent to 1.8 percent, while overall inflation sits at 2.2 percent to 2.4 percent—still within the BSP target. However, there is a high probability that food inflation will rise because the Philippines imports 90 percent to 98 percent of its oil requirements.

Increases in fuel prices directly raise logistics, fishing, cold storage, and electricity costs. This creates a domino effect; for example, a 20 percent increase in oil prices alone could add roughly 0.8 percentage points to inflation. Fertilizer and farm costs are especially vulnerable. While the Government is already preparing subsidies and fuel aid for farmers, consumers and businesses should brace for second-round pressures such as wage increases, higher electricity rates affecting food processing, and transport fare hikes.

There are, however, offsetting factors: good domestic harvests of rice and corn, the early arrival of rice imports, and government moves to suspend fuel excise taxes and lower rice tariffs.

For strategic planning, businesses and consumers should consider three possibilities. The first is the Base Case Scenario, which is most likely if the oil supply stabilizes between $80 and $90, resulting in mild food inflation of two percent to four percent. The second is the Moderate Shock Scenario, driven by sustained high fuel and fertilizer costs, leading to food inflation of four percent to six percent. This is becoming increasingly plausible. Finally, the Severe Shock Scenario assumes oil stays above $100 for more than a year, causing food inflation to accelerate to six percent to eight percent and pushing overall inflation past the government’s four percent target. It is always prudent to prepare for the worst by being ready for drastic cuts in energy use and travel.

The key insight here is that food inflation in the Philippines today is less about agriculture and more about energy. If fuel prices normalize, food inflation stays manageable; if they stay elevated, inflation accelerates. That said, the millions of households in urban areas—now 60 percent of the population—can do much to mitigate this. By converting idle land into vegetable and fruit gardens, we can increase food supply without the added burden of transport costs, as these items are consumed in situ.

We must motivate urban populations to “plant, plant, plant” in whatever small plots they can access. This is the time to mobilize public schools and households to take gardening seriously. Urban gardening addresses several human needs: it is physical exercise, a hobby that distracts from daily routine, and an effective way to make an idle economic resource productive. Having been involved in gardening for the last fifty years, I can personally attest to these benefits. Since transport, and not agriculture itself, is the primary driver of this crisis, growing food right where the urban population lives is our most effective response.

To be continued.