PSEi seen to recover after inflation peak

The Philippine Statistics Authority (PSA) is scheduled to release its report on September 2018 inflation on Friday, October 5, and some economists forecast another uptick due to the impact of the recent typhoon on agricultural products as well as the continued spike in oil prices in the international market. (qvist / ShutterStock)

MANILA — The local bourse as reflected by the Philippine Stock Exchange index (PSEi), is expected to make a comeback in coming weeks, if inflation has indeed peaked last August, an economist of the Landbank of the Philippines (Landbank) said.

The Philippine Statistics Authority (PSA) is scheduled to release its report on September 2018 inflation on Friday, October 5, and some economists forecast another uptick due to the impact of the recent typhoon on agricultural products as well as the continued spike in oil prices in the international market.

Landbank market economist Guian Dumalagan told the Philippine News Agency (PNA) that the inflation figure for September “might climb above seven percent.

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Rate of price increases went up to 6.4 percent last August from month-ago’s 5.7 percent, bringing the average to date at 4.8 percent. The government’s target is between two to four percent until 2020.

Monetary officials remain optimistic that inflation for the year will peak in the third quarter, although the Bangko Sentral ng Pilipinas (BSP) forecasts the September rate to range between 6.3 to 7.1 percent.

At the end of Monday’s trading, PSEi gave up 0.75 percent, or 54.74 points, to 7,222.08 points, which traders point to general risk-off sentiment ahead of the inflation report at the end of this week.

Dumalagan noted that if inflation further rose for September, the PSEi is not expected to be on uptrend in the near term. “Next quarters if it (inflation) peaks the index can trade higher, 7,600-7,800.

But if it still climbs we may (see it at) 6,800-7,000,” he added.

Authorities have traced the current inflation environment primarily to the increases in the global oil prices and to supply-side factors, with elevated prices of rice, fish, and vegetables pointed to lack of supply.

To address concerns on supply of food commodities, Malacanang came out with several issuances to address supply constraints and these include Administrative Order (AO) No. 13, which removes non-tariff barriers and streamlines administrative procedures on the importation of basic agricultural commodities.

The Office of the President has also issued Memorandum Order (MO) No. 26, which directs the Department of Trade and Industry (DTI) and the Department of Agriculture (DA) to implement measures that will reduce the gap between farm-gate and retail prices of agricultural products.

It has also issued Memorandum Order (MO) No. 27, which directs the DA, the Department of Interior and Local Government (DILG), and the Metropolitan Manila Development Authority (MMDA) to ensure efficient and seamless delivery of imported agricultural and fishery products from ports to markets.

Memorandum Order (MO) No. 28 was also issued ordering the National Food Authority (NFA) for the immediate release of about 230,000 metric tons (MT) of rice in its warehouses nationwide and the immediate distribution of the 100,000 MT of rice that have been contracted and was expected to be delivered by end-September.