Inflation data

       THIS week’s economic calendar includes the consumer price index (CPI), production price index (PPI), leading index and foreign reserves.

       Economists expect inflation to ease slightly in June at around 2.5%, below the 2.8% growth recorded in May.

       Inflation is expected to be at 2.6% while PPI is expected to contract 2.9% by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Meanwhile, Bank Negara is expected to announce international reserves as at July 14 today.

       Singapore CPI

       SINGAPORE’s headline inflation may edge lower to 4.6% year-on-year (y-o-y) with core inflation also expected to slow, according to ING.

       The Monetary Authority of Singapore will be weighing the upside gross domestic product (GDP) growth surprise alongside the improving price outlook for its meeting later this year.

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       Bloomberg estimates a headline inflation to grow of 4.4% y-o-y from 5.1% in May while underlying CPI which excludes private cars and housing is expected to expand 4.2% from 4.7% in May. Singapore is also expected to announce its industrial production (IP) for June this week. Bloomberg estimates are at minus 5.3% to minus 8.5% y-o-y. UOB thinks Singapore is not out of the woods yet in terms of risk of a technical recession in the first half of this year, especially if the contraction in June IP turns out much worse than Singapore Trade and Industry Ministry’s (implied) projection.

       It added that if manufacturing contracts in excess of 10% in June, then the risk of second quarter GDP’s 0.3% quarter-on-quarter growth being revised into negative territory will be quite high.

       BI decision

       BANK Indonesia (BI) is expected to maintain its policy rate at 5.75% at its meeting this week. All 31 economists in the July 14-19 Reuters poll expected BI to hold its key seven-day reverse repurchase rate at 5.75% at the conclusion of its meeting this week.

       ING also expects BI to extend its pause, keeping policy rates at 5.75%. Inflation has returned to target but pressure on the Indonesian rupiah of late may give governor Perry Warjiyo reason to keep rates steady. ING expects BI to stay on hold for a couple more meetings and only consider a potential rate cut once the rupiah stabilises.