Renewed virus restrictions across Asia have weakened consumer spending, but inflation may keep ticking higher in some of the region’s biggest economies. China’s consumer prices will climb an estimated 80 basis points next year, the most in Asia, according to economists surveyed by Bloomberg.
Diverging inflation paths will determine the different paces at which Asia’s monetary authorities start to wind down coronavirus pandemic-era stimulus.
In South Korea, where a gauge of consumer prices ran at 2.4% last month, the central bank is expected to start raising interest rates this year. The Reserve Bank of Australia is seen hiking in 2023.Surging costs of imported commodities have driven China’s factory inflation to the highest level since 2008, while selling prices to consumers are holding fairly steady.
The trend is likely to reverse next year, with consumer inflation expected to tick up to 2.3% from 1.5% this year, while producer prices slow to 1.9%.