Asia Week Ahead: Inflation Readings Across The Region
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Next week, we expect China's December inflation reading should move slightly back up towards zero following its recent descent into negative annual rates. Elsewhere, India's inflation will likely remain around 5.5% YoY, while in Australia the comparison with last years spike should be benign enough to see the inflation rate decline.
China: Chance December inflation figures move slightly back up towards zero
China’s December inflation reading will be carefully watched following its recent descent into negative annual rates, and there is a chance it will begin to move slightly back up towards zero. For all the talk of pork prices being the culprit of China’s negative inflation, this was actually something that happened a year ago when prices spiked on the back of a swine fever outbreak. Wholesale pork prices in recent months have been extremely stable, falling only very slightly in December from November.
What is different this month is that pork prices in December 2022 had already begun to fall and this will help inflation to edge back towards positive readings. Last month’s figures were also hit by lower gasoline prices – and while the average gasoline price in China in December is probably a little lower than in November, it hasn’t fallen quite as much, and the implied month-on-month overall inflation reading could be a lot closer to zero than the negative November figure.
India: Inflation to stay at 5.5% YoY
We also have Indian December inflation on the calendar next week, where there has been a broad-based decline in the prices of food, especially seasonal vegetables, potatoes, tomatoes, and onions. This was also the pattern last year, so the impact on the inflation rate will be pretty small, if any, and should remain at about 5.5% year-on-year.
Australia: Inflation rate could decline substantially
Australian inflation is also coming up. Last year’s surge in energy and food prices on the back of unseasonal cold and wet weather is unlikely to be repeated, at least not to the same extent, though we note that recent flooding in Queensland could still push up the prices in some areas. Even so, the comparison with last year’s spikes should be benign enough to see the inflation rate decline – perhaps substantially.
Key events in Asia next week
Image Source: Refinitiv, ING
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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
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