Favorable forex, low price rise bouy mart
A weaker currency is also a boon to overseas Filipionos workers’ remittances since it will mean more pesos for every dollar sent home
Manageable inflation and the expected boost to exporters from the weak peso provide reasons to raise market sentiment, according to traders.
Consumer price index (CPI) inflation settled at three percent, lower than market consensus of 3.2 percent and not yet reflecting recent developments on the geopolitical front.
A weaker currency is also a boon to overseas Filipino workers’ remittances since it will mean more pesos for every dollar sent home.
Investment bank senior economist Nicholas Mapa said downside pressure was provided by slower inflation for food items at 1.2 percent vs 1.7 percent previously, due largely to slower rice price inflation.
Meanwhile, upside pressure came from higher inflation for utilities and transport, reflecting costlier imported oil.
Given the ongoing conflict in Eastern Europe, more expensive global wheat and energy prices will likely filter through to domestic prices, pushing inflation past the Bangko Sentral ng Pilipinas target as early as the second quarter.
Volatility to persist
Food and transport are the two largest components of the CPI basket and any sharp price swings for these sectors should be enough to nudge inflation past 4 percent by May.
Inflation could heat up in a hurry given elevated global food and energy prices, Mapa added.
“Since Russia’s invasion with Ukraine started on February 24, global oil price benchmarks sharply went up by about $25 to $27 per barrel or by at least 26 percent in a little over a week, to $115 to $123 per barrel levels, the highest in about 10 to 13.5 years,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.