The Department of Agriculture (DA) expects the retail price of rice to fall to P45\/kg from the current level of P47-55\/kg with the arrival of more imported rice (covered by the lower tariff rate) in the coming months.<\/p>\n\n\n\n
The pick up in rice imports (after the government cut the tariff rate) coupled with the steady local production of palay this year are expected to result in a P6-7\/kg cut in local retail prices of rice, this as per the Philippine Statistics Authority (PSA). The country has imported some 2.3mn metric tons of rice already as of mid-2024 and the DA is targeting to import a total of 4.7mn metric tons this year.<\/p>\n\n\n\n
Rice accounts for 8.9% of the local consumer price index (CPI) basket. Lower inflation leads to increased consumer spending, which then boosts overall market sentiment. Thus, the lowering of rice prices has a huge impact on inflation expectations and subsequently, rate policy outlook. <\/p>\n\n\n\n
We expect inflation to start cooling off and hit the lower band of the BSP\u2019s target range of 2%-4% starting this month. We forecast August inflation to slow down to 3.7% vs. July\u2019s 4.4% to be driven by lower food and fuel prices. Our 2024 inflation forecast is at 3.1% for 2024 and 2.6% for 2025. And we expect the BSP to cut its rate by another 25bps (0.25%) before end-2024.<\/p>\n\n\n\n
We reiterate our upgraded index target of 7,500 for the year backed by 12.4% earnings per share (EPS) growth. <\/strong><\/p>\n\n\n\n Our top picks consist of quality names with cyclical recovery themes: SM, MBT, JFC, ALI, ICT, AP and MWC.<\/strong><\/p>\n\n\n\n