Negative base effects from 2023 dissipating in Asean

KUCHING: Analysts at the research arm of Standard Chartered Bank (Singapore) Ltd (StanChart) observed that the negative base effects from 2023 are dissipating across the Asean region, therefore the inflation base effects are expected to be largely neutral in 2024.

In a report, it said: “We believe the ‘easy part’ of inflation moderation is now done, as negative base effects have dissipated. This also suggests that any supply shocks and resulting upside inflation surprises will not be cushioned by negative base effects.

“That said, demand inflation is likely to be anchored, with tight monetary settings along with soft growth in the first half.

“The pass-through to core inflation from any supply shocks should be more contained in such an environment.”

However, it noted that Singapore still faces negative base effects this year, but GST and other administrative price hikes will likely be offsetting factors

Aside from that, the negative base effects are likely to weigh on Philippines’ headline inflation in January, August and September.

Negative base effects in the latter two months should help push inflation below four per cent. On aggregate, base effects are neutral in 2024.

Base effects are expected to be positive for Thailand’s headline inflation in 2024 following month-on-month declines in 2023 due to weak growth and government measures to manage consumer prices.

“Meanwhile, weak growth in Indonesia last year resulted in weak core inflation; base effects will therefore be positive for core inflation in 2024,” it added.