Eyes on the US after blistering PH inflation

Investors will be closely monitoring this week’s domestic and international data releases, including the latest United States inflation report.

The benchmark Philippine Stock Exchange index slipped nearly 1 percent the past week to end at 6,259.95 as sentiments were dampened by the red-hot September inflation report that showed consumer prices in the country rising by a higher-than-expected 6.1 percent.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said economic leads coming up this week include the Oct. 10 release of import and exports data and gross international reserves.

In the United States, investors would be looking forward to the Federal Open Market Committee minutes on Oct. 11 and the consumer price index data release on Oct. 12.At the local front, Bank of the Philippine Islands (BPI) said the latest data showed that inflation would stay above the Bangko Sentral ng Pilipinas’ 4-percent target until the end of the year.

“If rice prices stay at current levels, the year-on-year increase in rice prices will be double digit until July 2024, which will contribute 1.5 percent to headline inflation. Even in an optimistic scenario where the price of rice goes down by 0.5 percent month-on-month, the year-on-year increase will still be double digit until May 2024,” BPI said.

The lender also expects the BSP to raise interest rates during its November policy meeting “considering the latest developments.”

“We also cannot rule out an inter-meeting hike, especially if the peso breaches the P57 level [against the US dollar]. The risk of further peso depreciation is significant right now because of the recent behavior of oil prices and the surge in US yields,” BPI added.