Inflation in Asia Pacific economies to subside early: Moody's Analytics

Chennai, July 14: Inflation in Asia Pacific economies is expected to subside earlier as commodity prices retreat, but country-specific factors could lead to different inflation outcomes, said Moody's Analytics.

A combination of factors like the extreme weather, the Covid-19 pandemic and lockdowns in China, Russian invasion of Ukraine resulted in distorting global supply chain and inflation, Moody's Analytics said in a commentary.

In a commentary Moody's Analytics said high inflation is troubling because rising prices erode purchasing power and add to input costs.

"In 2022, it also exacerbates anxiety within businesses and households that have already survived two turbulent years," Moody's Analytics said.

Many central banks in the Asia-Pacific region have price stability among their mandates and are scrambling to pull inflation back from multi year highs by tightening monetary policy.

According to Moody's Analytics, inflation will subside relatively quickly in the region as commodity prices retreat, but country-specific factors could lead to different inflation outcomes.

"Our baseline assumption is that energy and food prices peak in the next few months and then trend lower; this assumes that the military conflict in Ukraine does not escalate," Moody's Analytics said.