Headline inflation eased to 1.33% y/y in September partly due to high base effects in three major components. They are food (0.4% y/y from 0.8% y/y), transport (3.9% y/y from 5.9% y/y) and housing (0.7% y/y versus 1.1% y/y). Meanwhile, core inflation which strips out food and fuel prices remained close to August’s, at 0.8% in September.

Looking at the latest data, we feel the normalization process will be gradual. We expect the first 25bps hike by the central bank could come in as early as end-2018 if not early 2019 since the headline CPI is between the central bank’s target range of 1% and 4% for six consecutive months. Besides, the 2Q2018 GDP grew firmly by 4.6% y/y.

• Headline inflation eased to 1.33% y/y in September from August’s 1.62% y/y partly due to high base effects in three major components. They are food (0.4% y/y from 0.8% y/y), transport (3.9% y/y from 5.9% y/y) and housing (0.7% y/y versus 1.1% y/y).

• Meanwhile, core inflation which strips out food and fuel prices remained close to August’s 0.75%y/y, at 0.8%.

• Looking at the latest data, we feel the normalization process will be gradual. We expect the first 25bps hike by the central bank could come in as early as end-2018 if not early 2019 since the headline CPI is between the central bank’s target range of 1% and 4% for six consecutive months. Besides, the 2Q2018 GDP grew firmly by 4.6% y/y.

Source: AmInvest Research - 2 Oct 2018