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Lower Food Prices Helping Asian Inflation Moderation

ASIA

Supply chain issues were one factor that drove Asian inflation higher over 2021-2022 but food prices also contributed (see MNI Inflation Should Keep Moderating As Supply Chain Tensions Resolve). The local peak in FAO global food price inflation was in March last year at +34% y/y (wheat and oils were heavily impacted by Russia’s invasion of Ukraine) but were down 20.9% y/y in June this year. Food price deflation has stabilised in recent months at a very low level signalling further downward pressure on Asian headline inflation is likely in the coming months.

  • All components were down on a year ago in June but Russia’s refusal to sign an extension of the grain deal with Ukraine could put upward pressure on cereal prices again, which are currently down 23.9% y/y. Oils are -45.3% y/y, dairy -22.2% and meat -6.4%. Sugar is the only main component to be higher at +29.7% y/y.
Non-Japan Asian CPI y/y% vs FAO global food prices y/y%

Source: MNI - Market News/Refinitiv/IMF/FAO

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