Inflation Moderates In April But Core Looking Stickier

Today China reported its April CPI with headline declining more than expected to 0.1% y/y from 0.7% but the core stable at 0.7% y/y (see Inflation Outcomes Likely To see Easing Expectations Persist). While base effects provided headwinds, the monthly change was negative for the third consecutive month. Our non-Japan Asian aggregate for April has moderated to 2.2% y/y from 2.6%, as most of the region to date has recorded lower April inflation. The underlying measure looks stickier as it held steady at 1.6% but off the 1.9% peak in January.

• China’s inflation has been lower than the rest of the region and if we exclude China then Asian inflation moderated to 4.7% in April from 4.9% and again core was steady but at 3.8%.
• The moderation in headline inflation has allowed a number of Asian central banks to pause their tightening cycles and April developments look to be justifying their decisions (see Inflation Continues Moderation In April Giving Central Banks Flexibility). Inflation in the Philippines though remains the biggest problem, although it moderated in April to 6.6%, thus pointing to continued tightening from its central bank.
• In March, non-Japan Asian ex China inflation was well below the OECD’s at 4.7% compared with 7.7% and 3.8% versus 7.2% for core. Asia has a lot less of an inflation problem, which is reflected in their less aggressive hiking.

Source: MNI - Market News/Refinitiv