Inflation likely rebounded in September – poll
From AB Capital's The Opening Bell: Three Moves
Event
September inflation likely accelerated to 6.7% from 6.1% in August, driven by higher fuel and food prices and peso weakness. That would end four months of easing, mark a seventh straight month above target, and lift 9-month average inflation to 5.3%.
View
We think the concern is increasingly about persistence into 4Q26. Weather-related food disruptions, elevated rice prices and expensive fuel are now being joined by wage and transport fare adjustments, increasing the risk that supply shocks broaden into core inflation and keep inflation expectations elevated.
Catalyst
Official September consumer price index (CPI) will be released tomorrow (Oct. 6, 9 a.m.) and we think it could largely shape the policy decision during the Bangko Sentral ng Pilipinas (BSP)'s Oct. 22 Monetary Board meeting. A result around the 6.7% consensus would support another 25bp hike to 5.25%; a print near 7.4%, especially with firmer core inflation, would also raise the probability of another move in December.
Action
In our view, the setup reinforces a higher-for-longer rates call and keeps us selective on domestic cyclicals. We would favor banks with stronger funding franchises and asset quality buffers, alongside defensives and dollar earners, while remaining cautious on discretionary consumption and other highly rate-sensitive sectors.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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