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September CPI: Still Climbing

CPI inflation sustained its upward trajectory to 6.7% yoy in September 2018, up from 6.4% in August, albeit slightly below consensus expectation. Core inflation eased marginally to 4.7% yoy, from 4.8% in August.

Given the recent rally in global crude oil prices and little sign of domestic core inflation abating, we revise our CPI inflation forecast for FY 2018 to 5.4% from 4.9% and for FY 2019 to 4.2% from 4.0% previously.

Accordingly, we are penciling in another 50bps in policy rate hikes by the BSP before the year ends, which could provide some support to the PHP in the near term.

Gabriel Roque - Research Analyst BDO Unibank