Delayed Transmission Softens Inflation Expansion in March
Inflation data released by the National Bureau of Statistics this morning showed consumer prices rose by 0.84% MoM in March, coming above 0.79% MoM in February, but below our forecast of 0.93% MoM change. The increase compared to the prior month largely mirrored 7bps MoM increase in both the food and core index to 0.94% and 0.80% respectively.
The modest growth in the core and food index largely reflect the delayed transmission of the disruptive impact of the breakup in the supply chain and higher transportation cost of essential items due to the lockdown, both of which should have resulted in temporary higher prices.
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