Asia-Pacific Inflation Monitor: Renewed upward pressure from energy prices

Both our and consensus CPI inflation forecasts moved higher across the region soon after the onset of the Iran war, closure of the Strait of Hormuz, and the consequent reduction in energy supply to Asia. Our commodities strategists raised their Brent oil price forecast to $85/bbl for December. Energy prices have moved meaningfully higher again over the past several weeks, which should be reflected in further increases in import prices and producer prices in September in many economies (though to a lesser extent in final consumer prices, given fiscal subsidies and regulated prices in many cases). Though oil prices did not return all the way to the March peak, refined product prices remain elevated, and LNG and diesel prices set new highs for the year. Before the ongoing Iran war, CPI inflation was broadly in line with or below central bank targets in most countries;