December CPIs Indicate Contained Second-Round Effects In Most Places

A number of countries have published CPI data for December and apart from the Philippines underlying inflation continued to move sideways suggesting contained second-round effects from higher food and energy prices.

• Korean headline inflation peaked in July at 6.3% and has moderated since then. In December it was in line with November at 5% y/y. Core looks like it may have peaked in Q4, as December posted a slight decline to 4.76% from 4.83% the previous month. The Bank of Korea is likely to want to see this moderate more decisively.
• Indonesian inflation also seems to have peaked in September. The December rate ticked up slightly to 5.5% from 5.4%. Core was also up slightly to 3.36% from 3.3% but continued moving sideways suggesting that there hasn’t been an increase in second-round price pressures, which Bank Indonesia is watching closely.
• Core inflation in Thailand was stable at 3.2% in December, which should allow the Bank of Thailand to remain gradual in its policy tightening. Headline rose to 5.9% from 5.5% due to higher food and energy prices.
• Inflation in the Philippines continues to be a problem with headline rising to above 8% for the first time since November 2008. Core also rose further to 6.9% from 6.5%, a year ago it had been only 1.8%. As a result, the BSP is likely to continue tightening.

Source: MNI - Market News/Refinitiv