• Deflation eased to the smallest in nine months in November (-0.4% YoY; consensus: -0.4%; Oct: -0.5%)
  • MoM (0.0%; Oct: 0.0%): sequential inflation remained muted for the second successive month.
  • Core inflation (0.2%; Oct: 0.2%): retained as the softest inflation in five months, suggesting limited demand-pull pressure.
• The uptrend was underpinned by a slower decline in prices of non-core goods (-2.0%; Oct: -2.4%)
  • Transport & communication (-4.2%; Oct: -4.3%): smallest deflation in nine months in line with the rise in global oil price (USD42.69/barrel; Oct: USD40.19/barrel) amid COVID-19 vaccine optimism.
  • Food & non-alcoholic beverages (1.7%; Oct: 1.6%): edged higher to almost pre-COVID level as prices of vegetables continued to surge (15.3%; Oct: 11.5%), buoyed by a lower base in the preceding year.
• Mixed inflationary trend across the advanced and developing economies
  • Euro area (-0.3%; Oct: -0.3%): remained in a deflationary mode for the fourth straight month as demand conditions were tempered by the re-tightened lockdown measures in major euro area economies
  • PH (3.3%; Oct: 2.5%): highest inflation in 21 months as crops were damaged by the Typhoon Goni and Vamco, leading to a surge in agricultural goods prices.
• 2020 CPI is expected to register at the lower-end of our forecast range (-1.0 - 0.0%; YTD: -0.9%; 2019: 0.7%)
  • Extended fiscal measures, favourable domestic COVID-19 situation and an increase in global oil price on the back of COVID-19 vaccine progress are expected to continue supporting the easing deflationary trend.
  • The BoT may keep the policy rate unchanged at 0.50% at the final policy meeting this month, underscored by the BoT’s goal of preserving its limited policy space.

Source: Kenanga Research - 7 Dec 2020