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Elevated September CPI Reads Point To Further Tightening

ASIA

September CPI inflation releases in Asia have been mixed with Korea and Thailand showing headline inflation peaking but the Philippines and Indonesia posting further increases. Underlying inflation has tentatively peaked at elevated rates in a number of countries and continued to rise in others, thus implying that Asian central banks have more tightening to do.

  • The Bank of Korea already began tightening in 2021, one of the first central banks to do so, but September inflation moderated for only the second consecutive month to 5.6% from 5.7%. Core actually rose slightly to 4.5% driven by stronger services prices. Inflation remains well above other countries in the region. Higher utility bills should drive a tick up in the October CPI.
  • Inflation in Thailand moderated more than expected in September to 6.4% from 7.9% due to lower food and energy costs, which was a welcome development given the August rate was the highest since July 2008. However core inflation was steady at 3.1% (also a high since 2008).
  • Philippines September CPI rose to 6.9%, as expected, from 6.3% with the core falling slightly to 4.5%.
North Asia Core CPI y/y%

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September CPI inflation releases in Asia have been mixed with Korea and Thailand showing headline inflation peaking but the Philippines and Indonesia posting further increases. Underlying inflation has tentatively peaked at elevated rates in a number of countries and continued to rise in others, thus implying that Asian central banks have more tightening to do.

  • The Bank of Korea already began tightening in 2021, one of the first central banks to do so, but September inflation moderated for only the second consecutive month to 5.6% from 5.7%. Core actually rose slightly to 4.5% driven by stronger services prices. Inflation remains well above other countries in the region. Higher utility bills should drive a tick up in the October CPI.
  • Inflation in Thailand moderated more than expected in September to 6.4% from 7.9% due to lower food and energy costs, which was a welcome development given the August rate was the highest since July 2008. However core inflation was steady at 3.1% (also a high since 2008).
  • Philippines September CPI rose to 6.9%, as expected, from 6.3% with the core falling slightly to 4.5%.
North Asia Core CPI y/y%

Keep reading...Show less