Regional Inflation Eases Further, Moderation Likely To Slow Going Forward

Numerous Asian economies have reported July inflation and the data to date show that inflation continued to moderate at the start of Q3. But certain global disinflationary forces such as food and fuel prices appear to have turned which is likely to make further declines tougher to achieve (see MNI Disinflationary Forces Easing).

• Excluding China non-Japan Asian inflation eased to 3.6% from 3.8%, the slowest pace since October 2021. This assumes though that July was equal to June for countries that have not yet released data and so it could be even lower when all countries have reported. Core is also moderating coming down to 3.2% from 3.4%, the lowest since May 2022, which should reassure the central banks across the region, most of which have paused tightening.
• China’s July CPI fell 0.3% y/y and so non-Japan Asian inflation moderated further to 1.5% y/y from 1.7%, the slowest since February 2021. But China has said that disinflation is expected to be temporary and so Asian inflation is probably close to a trough. China’s core CPI rose 0.8% y/y from 0.4%, thus underlying Asian inflation rose to 1.5% from 1.2%. See MNI Negative CPI Y/Y Momentum Expected To Be Temporary, PPI Deflation Moderates.

Source: MNI - Market News/Refinitiv