|
INFLATION may climb to 10.5 percent this month on the
heels of soaring prices of oil and other commodities,
bank economists said.
The
inflation figures are also within the central bank
forecast that the rise in prices of goods and services
will hit double-digit this month to an average of 10
percent to 11 percent.
Data
from the National Statistics Office show that inflation
in May jumped to 9.6 percent from 8.3 percent April.
“Given
the trajectory of oil, it is possible that inflation
this month will reach double-digit growth, at around
10.5 percent. We have no doubts about the BSP [Bangko
Sentral ng Pilipinas] projection,” said Marcelo Ayes in
a phone interview. He is senior vice president for
financial markets of Rizal Commercial Banking Corp.
He said
the June inflation figures are now factored in by the
fixed-income and currency markets.
The debt
market, he said, is placing bets on higher inflation and
positioning for longer-term securities, while the
currency market is looking at the possibility that the
peso will not “weaken as much.”
Ayes
explained the debt and currency markets rely on oil data
since movements in oil will dictate the direction of
trade.
“I think
the market has already discounted [higher inflation in
June], both the fixed-income and currency markets. Oil
is the wild card. By the third quarter, it may go down,
but we are still looking for developments in Nigeria and
the Middle East,” he said.
While
the peso may now be weak against the dollar, the rate
may not touch the P45 level as the BSP is expected to
prop up the local currency to contain inflation, Ayes
added.
The peso
will not drop so much. “It will not be P45:$1 unless oil
reaches $160 per barrel. But then, at that point, the
central bank is expected to intervene,” he said.
He said
the peso is expected to breach the P44.79 level, which
is the upper end of the trading band before it goes on
correction. The market is now looking at P44.20 as the
lower end of the band.
Ayes
said that this week, the peso is expected to correct to
around P44.25.
Chinabank treasurer Antonio Espedido also sees a
10.5-percent inflation rate this month owing to soaring
prices of food and gasoline.
“There
is a possibility [of a double- digit inflation]. The
trend will still be close to 10 percent, around
ten-and-a- half,” he said.
“Despite
the increase in remittance inflows, there is still
pressure because of high oil-importation cost,” Espedido
added. |
