KUALA LUMPUR: Inflation base effects in the Asean region may be largely neutral this year after the dissipation of the negative base effects of last year, said Standard Chartered Global Research (StanChart Research).
The firm believes that the "easy part" of inflation moderation is now done, as negative base effects have dissipated.
This 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 of 2024 (1H24).
"The pass-through to core inflation from any supply shocks should be more contained in such an environment," it said in a report.
StanChart Research also noted that Singapore still faces negative base effects this year, but the good and services tax (GST) and other administrative price hikes would likely be offsetting factors.
Negative base effects are likely to weigh on the 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 to be positive for Thailand's headline inflation in 2024 following month-on-month (MoM) 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, therefore base effects will be positive for core inflation in 2024," it added.