Asia | Imported inflation is still manageable

Asia’s growing inflation pressures have significantly picked up due to the global supply chain disruptions and high commodity prices. Inflation dynamics have been divergent as consumption habits hit differently. Inflation inertia remains high, while housing and transport push is stable, food prices are climbing.

Key points

• Key points:
• Global supply chain disruptions and high commodity prices have translated into imported inflation in the region. However, the social distancing policy and mobility restrictions implemented in some Asian countries altered consumption habits and inflation dynamics.
• Inflation inertia remains high and has been divergent in the region. Strain rose in India, Philippines and Thailand where high commodity prices had earlier and greater impacts. In Indonesia and Malaysia, the rising food prices also constitute the main factor to push up the general price level.
• Japan’s and South Korea’s price trend is strongly influenced by a weak local exchange rate and global energy prices. China’s weak consumer demand, still keeps overall price pressures at bay. Vietnam stays below its inflation target and the recent fall in fuel prices caused a decrease in food and other goods prices.
• Looking ahead, the evolution of regional inflation is still subject to some uncertainties. We are cautiously optimistic about the inflation situation in the region. Provided that food and energy prices are to stabilize, headline price pressures would cool down.

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