Philippine inflation rate holds steady at 6.7% in October

Analysts are optimistic that inflation rates in the Philippines would ease during the final months of the year. (AFP)
Updated 06 November 2018
0

Philippine inflation rate holds steady at 6.7% in October

  • The inflation of food prices, where rice is a major component, eased slightly to 9.4 percent year-on-year from 9.7 percent
  • ‘Concerted government efforts … to tame the prices of goods in the previous months have finally resulted in expected outcomes’

DUBAI: James Mendoza, a Filipino government health worker, is looking forward to a happier celebration during the upcoming holiday season as Philippine consumer prices – which have been rising steadily since the start of the year – finally may have stabilized.
“Prices of basic commodities especially, rice have gone down, unlike in previous months when price increases were unabated,” Mendoza told Arab News. “I am looking forward to a continued reduction in prices (of basic commodities), particularly that of fuel since I use a motorbike.”
The Philippine government announced on Tuesday that inflation was heading towards a downward path with year-on-year headline inflation in October steady at 6.7 percent, similar to that of the previous month. The inflation of food prices, where rice is a major component, eased slightly to 9.4 percent year-on-year from 9.7 percent.
Slower inflation rate movements were also recorded in food items such as corn and meat, fruits and vegetables. The consumer price index for housing, water, electricity, gas and other fuels was up 4.8 percent.
The Philippines has one of the highest inflation rates among Southeast Asian countries, with only Myanmar reporting a higher 8.6 percent as of September, compared with Indonesia at 3.16 percent and Thailand with 1.23 percent both in October.
“Concerted government efforts … to tame the prices of goods in the previous months have finally resulted in expected outcomes,” a statement from the government economic team said. “And such promising results further motivate the economic team to work closely with all concerned government agencies to more aggressively implement mitigating measures to ease inflation over the medium- and long-term.”
The rosier inflation outlook presented by the government, according to Mendoza, will go some way to reassure Filipinos they will not have to dig deeper into their pockets considering “Christmas season in the Philippines is synonymous with spending – from buying gifts to eating out to celebrate the festive holiday.”
Analysts are similarly optimistic that inflation rates would ease in the final months of the year despite some price pressures such as the recent fare hike and the increase in minimum wages for workers in the Philippines’ national capital region.
“The proposed tariffication of rice imports and planned suspension of higher excise taxes on fuel and petroleum scheduled in January 2019 could help further ease inflation and inflation expectations in the coming months,” Michael L. Ricafort, head of the economics and industry research division at Rizal Commercial Banking Corporation, told Arab News. “Increased imports of rice, fish and other food items plus the non-monetary measures by the government to augment supply in an effort to ease food prices – including the imposition of suggested retail prices on rice that further eased rice prices – helped tame October inflation.”
“The appreciation of the local currency last month softened the peso value of imported goods, thereby helping control the increase in consumer prices,” Land Bank of the Philippines market economist Guian Angelo Dumalagan meanwhile said. “Moving forward, inflation is expected to gradually decline as food price pressures moderate further and as the peso stabilizes against the dollar.”
“The stabilization in annual inflation and the month-on-month deceleration in consumer prices could convince the Bangko Sentral ng Pilipinas (BSP) to refrain from hiking its policy rates again in November 2018,” Dumalagan added.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines’ corporate research unit, also agreed that the Philippine central bank may no longer “pull the trigger for another round of rate hikes, whether it’s 50 or 25 basis points, within this year.”
“This easing of prices levels also supports the return to inflation target range of between 2 percent and 4 percent by 2019,” Asuncion said.
Nomura economists, however, were more cautious of the inflation horizon: “Claiming the peak of inflation is in sight remains uncertain, but as we have argued before, BSP remains firmly focused on anchoring inflation expectations given the risk that headline inflation may persist above target next year (as we expect), rather pinning down the exact timing of the inflation peak to determine the course of its policy action.”
“Overall, our full-year 2018 CPI inflation forecast of 5.4 percent remains on track, which implies that for the rest of the year we expect headline inflation to average a still-elevated 6.7-6.8 percent year-on-year.”


SoftBank mobile unit to go for $21bn IPO

Updated 13 November 2018
0

SoftBank mobile unit to go for $21bn IPO

  • The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations
  • SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding

TOKYO: SoftBank Group Corp. has won approval to conduct a 2.4 trillion yen ($21.04 billion) initial public offering (IPO) of its domestic telecoms business, in a deal that will seal the group’s transformation into a top global technology investor.
The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations that CEO Masayoshi Son predicts will drive future tech trends.
SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.
SoftBank Group aims to raise 2.4 trillion yen through the sale of 1.6 billion SoftBank Corp. shares at an tentative price of 1,500 yen each, a filing with the Ministry of Finance showed on Monday.

 

 The amount could rise by 240.6 billion yen if demand triggers an overallotment, taking the total closer to the $25 billion that Alibaba raised in 2014 in the biggest-ever IPO.
The final IPO price will be determined on Dec. 10, and SoftBank Corp. will list on the Tokyo Stock Exchange on Dec. 19 with an initial market value of 7.18 trillion yen — about 1 trillion yen above that of rival KDDI Corp, which has about 10 million more subscribers.
The parent will retain a stake of around two-thirds, depending on the overallotment.
The mammoth offering comes at a time when investors have begun questioning the outlook for Japan’s telecoms companies.
The IPO was initially expected to appeal to investors seeking stability, but the government has recently called on carriers to lower fees while backing more wireless competition, sending shockwaves through the industry.
Yet SoftBank’s brand is still likely to draw retail investors long accustomed to using SoftBank’s phone and Internet services. Many still see CEO Son as a tech visionary who brought Apple’s iPhone to Japan.
Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits. More than 80 percent of the shares will be offered to domestic retail investors, a person with knowledge of the matter told Reuters.
“I think a reasonable amount of money will be attracted to this one,” said Tetsutaro Abe, an equity research analyst at Aizawa Securities. “It’s a mobile company, so the cash flow is steady.”

FACTOID

SoftBank to sell 1.6 billion shares at a tentative price of 1,500 yen ($13) each.