FREE Market Commentary: Economist Says 6% Inflation Likely in May-June
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Market Issue or Event
6% Inflation Likely in May-June, Says Economist
Inflation for this month of March will likely fall between 4.9-5.0% as the market continues to adjust from the effects of the newly passed tax reform program, according to Alvin Ang, an economist from Ateneo de Manila University. The higher inflation was also affected by other factors such as power rate hikes and fluctuating oil prices in the world market.
Inflation is also expected to peak at around 6% in May to June, mainly due to financial preparations for the start of the school year. However, inflation is expected to taper off as it approaches the latter part of 2018, as the market adjusts. Inflation is expected to settle at an average of 5% by year end.
Our Partner Broker’s View and Commentary
Given the expected spikes on inflation rates for the year, we expect this to be a blow for Consumer companies such as:
– JFC (Consensus Target Price: PHP 285.30)
– MAXS (Consensus Target Price: PHP P20.80)
– PIZZA (Consensus Target Price: PHP P16.40)
– URC (Consensus Target Price: PHP 147.20)
as margins of these companies are likely to suffer due to higher costs of raw materials.
As for Retail companies, higher cost will be passed on to consumers, however, volume could be tapered as demand would likely be sour until the market adjusts. Our Target Prices for Retail companies:
– PGOLD (Consensus Target Price: PHP P56.00)
– RRHI (Target Price: PHP 112.00)
– MRSGI (Target Price: PHP 5.00)
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