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Inflation Continues Moderation In April Giving Central Banks Flexibility

ASIA

Korea, Indonesia and Thailand have released CPI data for April and have all shown moderating inflation. If this trend is seen across most of the region then non-Japan Asian inflation should see another step down in April and continue to take the pressure off most central banks to tighten further.

  • Korean CPI fell below 4% in April for the first time since February 2022 and is consistent with the Bank of Korea’s decision to leave rates on hold at its last meeting. CPI eased to 3.7% from 4.2%, well below the July 2022 peak of 6.3%, and while core is proving a bit stickier, it also moderated to 4.6% from 4.8%.
  • Indonesian CPI moderated to 4.3% from 5%, its lowest since May 2022 and close to the top of BI’s target band of 2-4%. It said in its April meeting statement that it is “confident” that the CPI would return to target “sooner than previously projected”. Core inflation is just under the mid-point at 2.8% down from 2.9% in March.
  • Inflation in Thailand is currently lower than most of the region and eased further in April to 2.7% from 2.8% with core at 1.66% from 1.75%. The government expects headline to be below 2% in May. While rates are also lower than other countries, Bank of Thailand likely has more tightening to do given its expectations that the rebound in tourism will boost domestic growth and add to inflationary pressures, but the sanguine CPI reads give it some flexibility if it decides to slow the pace.
Asia CPI y/y%

Source: MNI - Market News/Refinitiv

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