Products Block: Filtering by Category or Tag doesn't Work

[druesome]

Describe the bug

Filtering products by category or tag in the Products block doesn't work.

To reproduce

Steps to reproduce the behavior:

1. Insert the Products (Beta) block in a post or page
2. In the block settings, enter a product category or tag under Filters
3. Update the post or page

Expected behavior

For the post or page to display products belonging to the specified category or tag

What happened

The block does not respect the filter and displays all products on the live post or page.

Ticket

5877934-zd

Environment

WordPress (please complete the following information):

• WordPress version: 6.1.1
• WooCommerce version: 7.3.0

[imanish003]

There is this issue, according to which Filtering by Category or Tag works on frontend but not in Editor. That issue is there in Query Loop itself. For more info: WordPress/gutenberg#29438 (comment)

But it looks like there is a regression because of which now filters don't work on front-end either. I will look into it.