There's still hope for Asian inflation: UBS
UBS says Asian inflation will ease to 3.9% in 2012 due to weaker commodity prices.
Chinese inflation has already slowed to 6.2% last month and Indonesian inflation is already showing signs of turning down.
Here’s more from UBS:
| Inflation What the numbers say: Importantly Chinese CPI slowed to 6.2%y/y last month (July 6.5%). Indonesian inflation is turning down. What they mean: Inflation provides critical hints about the direction of monetary policy. High inflation, when combined with above-trend economic growth and low unemployment, typically provokes monetary tightening; whereas low inflation, when coupled with below-trend economic growth and high unemployment, tends to produce the opposite policy. 12-month outlook: We expect Asian inflation to slow to 3.9% in 2012E from 5.1% in 2011E. Below trend growth and weaker commodity prices should reduce inflation next year.
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