Asia Morning Bites For Thursday, Sept 12

G-7 Macro: Headline August US CPI rose in line with expectations, up 0.2% MoM, and dropping to 2.5% YoY from 2.9% in July. It was the core measures where the disappointment lay. Core CPI rose 0.3% MoM rather than the 0.2% that had been expected. However, this left core inflation running at 3.2% YoY as expected, thanks to rounding. PPI data due today will also be worth a look as some of the PCE numbers derive from elements of this data, as well as the CPI release. There was disappointing activity data from the UK yesterday, where the monthly GDP numbers came in flat for a second consecutive month. 3Q24 GDP in the UK is shaping up to be soft as a result. Other than that, the big news for today will be an expected further 25bp rate cut from the ECB, taking the deposit rate down to 3.5%.

India: Consensus forecasts for Indian inflation for August show a further small decline from 3.54% to 3.47% YoY. We are at the low end of the consensus with a 3.10% forecast as falling food price inflation should have a bigger impact than the consensus numbers indicate.

Japan: Pipeline inflation showed that underlying inflationary pressures cooled in August thanks to falling commodity prices and the JPY’s appreciation. Producer price inflation eased faster than expected to 2.5% YoY in August (vs 3.0% in July, 2.8% market consensus). The month-on-month change fell to -0.2% MoM sa as utility prices dropped for the first time in four months. Also, import prices moved down sharply to 2.6% YoY in August (vs 10.8% in July). Consumer price inflation for August, released next Friday, is expected to temporarily surge to 3.0% YoY. But we believe inflation will come down again from September, helped by the restart of the energy subsidy programme. The slowdown of pipeline prices will allow the BoJ to monitor financial market developments. But if growth, especially consumption conditions improve, the BoJ is likely to resume its rate hikes as early as December.