Rising global oil prices could push about 1.34 million Filipinos into poverty, based on a simulation of current oil price conditions in a policy note by government think tank – Philippine Institute for Development Studies (PIDS).
The estimate reflects the study’s “current scenario,” which assumes oil at USD105 per barrel and a 35 percent pass-through to domestic prices. Under this setup, the national poverty rate is projected to rise from 13.2 percent in 2025 to 14.4 percent, reversing recent gains.
The findings come as separate PIDS research shows that about 30 percent of Filipino households are vulnerable to falling into poverty—including segments of the middle class—highlighting how large parts of the population remain exposed to economic shocks.
The current oil price surge, however, presents a more immediate risk. The increase in poverty is expected to come largely from households just above the poverty line—the so-called “near poor”—who are most at risk of slipping into poverty as daily expenses rise.
PIDS Senior Research Fellow Jose Ramon G. Albert said the impact cuts across all income groups, but the burden is not shared equally.
While higher-income households may lose more in peso terms, poorer families absorb the heavier blow because they spend most of their income on essentials and have little to no savings.
The study estimates that poor households could lose as much as 16.2 percent of their annual income in real purchasing power, compared to only 3.4 percent among the richest households.
Even families without cars or direct fuel expenses are affected, as rising oil prices drive up the cost of food and other basic goods.
The impact is stronger in rural areas, where poverty is projected to rise from 18.5 percent to 20 percent, compared to 8.7 percent to 9.6 percent in urban areas under the same scenario. Many rural families depend on farming and other fuel-intensive activities, have fewer income-earning opportunities, and spend more on food.
Areas that are already poor—such as the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), the Visayas, Bicol, MIMAROPA, and parts of Mindanao—are expected to be hit the hardest.
Beyond the current scenario, the analysis outlines what could happen if the crisis worsens. If oil prices climb to USD125 per barrel, up to 2.35 million Filipinos could fall into poverty. At USD145 per barrel, the number could reach 3.50 million, with sharper increases in rural areas.
The projections show that the longer and deeper the shock, the more it pulls vulnerable households into poverty and widens inequality.
Given these uneven impacts, the policy note also examined how different policy responses affect households. It finds that blanket fuel subsidies tend to benefit higher-income households more, as they consume more fuel.
By contrast, the analysis shows that directing support toward poorer and near-poor households—those least able to absorb rising costs—is more responsive to the distributional impact of the shock.
These potential target groups include 4 million households already identified in social protection systems, 1.6 million eligible but currently uncovered families, and about 6.5 million vulnerable households outside existing lists, such as minimum-wage workers, persons with disabilities, and newly identified poor households.
Albert said that without timely and targeted intervention, the long-term effects could deepen.
The projections point to a clear risk: as fuel prices rise, poverty does not just increase—it spreads, pulling vulnerable families down and making recovery more difficult the longer the crisis persists.
