It can be noted that during the past 5 months, the inflation rate is continuously slowing down. Last February, the government was able to hit the goal of easing the inflation down to 3.8%. This was obviously a strike on the bull’s eye considering that the economy had experienced a 6.7% rate last September and October 2018. Last year was a shocking event to everyone and as the government continues to take the path where economy progresses, the month of April brought a good news to everybody– a 3% inflation rate, even lower than last year! So what drives the downward trend of the inflation today? It is something useful for existing and new investors?
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Inflation keeps on going downward, which means we are on the right track to a more improved economy unlike what we have experienced in 2018. What triggers the downward trend is the slower increase in food and non-alcoholic beverages. Taking a sneak peek at the food category, the prices of rice, which has the heaviest scale among other food commodities, slack up to 0.02%. The price deceleration can be accredited to the stabilizing rice supply as the country expects more rice to be imported in the coming months. Other decelerated rates include alcoholic beverages and tobacco at 9.9%, health at 3.7%, restaurant and miscellaneous services at 3.5%, housing and utilities at 3.2%, household maintenance and equipment at 3.2%, and clothing and footwear at 2.4%.
Since the inflation is on a downward trend, this opens the great door for consumption stocks. This is the type of investment where you put your money in companies that are produce consumer-oriented goods like food, tobacco, beverages, and pharmaceuticals. One of the good companies where you can invest is San Miguel Food and Beverages, Inc. (SMFB). This company has earned the attention of investors just recently because of the slowing inflation. If this trend will continue, consumer companies will surely recover and thus, will earn more this year.
All the fears of USD winning over the strength of peso and the oil prices going higher are now out of the window because of good outlook for inflation rate. The effort of the government to stabilize the economy is seen from results we are getting right now. However, due to the factors we can’t control such as El Nino and the unstable oil price in the global market, we still need hustle more. The government should focus more on measure that will mitigate social issues especially in relation to TRAIN law.