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| FACTBOX-Inflationary pressures in Southeast Asia |
| 03-SEP-2010 | Reuters |
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| 3 Sep, 2010 - 7:11:00 AM |
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Southeast Asia is facing inflationary pressures as its economies recover from the global downturn, putting pressure on central banks to unwind easy monetary policies.
Thailand has lifted interest rates twice this year, and is likely to do it again in October, while Indonesia may start raising rates by the end of the year.
Malaysia has increased rates three times this year, although it may be on hold for now to assess the global economy. The Philippines raised one of its rates on January 28.
Economists expect others to follow but the timing depends on how far and how fast prices rise.
Below is a snapshot of Southeast Asian inflationary pressures and how policymakers are responding.
THAILAND
Annual inflation in the $264 billion economy eased to 3.3 percent in August, as expected, from July's 3.4 percent, data on September 1 showed, but analysts still expect a rate rise next month.
Annual core inflation, steady at 1.2 percent, does not pose a threat this year but the central bank reckons it could rise to the upper end of its target range of 0.5-3.0 percent next year.
It has raised its key policy rate twice this year by 25 basis points in both July and August, taking the rate to 1.75 percent from a record low of 1.25 percent.
Most economists expect another quarter point rise at the October 20 review and expect it to be at 2.0 percent by the end of the year.
* Key pages:
* Next CPI data: October 1
* Recent stories: [ID:nSGE680032] [ID:nSGE67P0E2].
INDONESIA
Inflation rose less than expected in August, reinforcing expectations rates will be kept unchanged on Friday.
Headline CPI rose 6.44 percent in August from a year earlier after July's 6.22 percent, while annual core inflation rose to 4.53 percent from July's 4.15 percent, data showed on September 1.
Economists still expect the central bank to start increasing rates by end of the year due to rising core inflation. Headline inflation has held above its target range of 4-6 percent.
The central bank has said it would keep its key policy rate at a record low of 6.5 percent if inflation was within its end of the year target range.
* Key pages:
* Next CPI data: Tentatively October 1
* Recent stories: [ID:nJAK496148] [ID:nJKB003917].
SINGAPORE
July consumer prices rose 3.1 percent from a year earlier after June's 2.7 percent, reflecting higher costs of transport, housing and food, data on August 23 showed.
The central bank expects inflation to average 2.5-3.5 percent in 2010. It tightened monetary policy in April by adjusting its Singapore dollar policy band upwards and by shifting its policy to modest and gradual appreciation for the currency, after stronger-than-expected first-quarter growth.
* Key pages:
* Next CPI data: September 23
* Recent stories: [ID:nSGC003727] [ID:nSGE67T016].
MALAYSIA
Malaysia's consumer price index rose 1.9 percent in July from a year before, up from 1.7 percent in June, data showed on August 18.
The central bank has become one of Asia's most hawkish with three 25-basis-point rises this year, bringing the overnight policy rate to 2.75 percent as the economy rebounded.
But the central bank has said rates are "appropriate", signalling rates would be kept steady for now as it assessed the global economic recovery.
* Key pages:
* Next CPI data: September 22
* Recent stories: [ID:nKLA002228] [ID:nSGE67H056].
VIETNAM
Consumer prices have held above the government's 8 percent target, increasing 8.18 percent in August from a year earlier, little changed from 8.19 percent in July, data on August 23 showed.
The central bank said on August 25 it would leave its benchmark base rate unchanged at 8 percent in September, having raised it from 7 percent in December last year.
Vietnam has projected inflation next year will ease to around 7 percent from below 8 percent this year, according to a state-run newspaper.
* Next CPI data: around September 23-24.
* Recent stories: [ID:nHAV002041] [ID:nSGE67J0AU]
PHILIPPINES
The inflation rate held at its 2010 low in July, with annual inflation steady at 3.9 percent, data on August 5, showed, pushing out the timing of any rise in interest rates.
Governor Amando Tetangco said the July reading supported the central bank's view inflation was on track to meet the government's target of 3.5 percent to 5.5 percent in 2010, and that it justified steady policy.
http://malaysia.news.yahoo.com/rtrs/20100901/tap-economy-southeastasia-inflation-c3bb44c.html
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