Increases in private demand are the mechanism by which economies adjust to a disinflationary
oil price shock.
Given the similar trends in both PCE and CPI core goods inflation, both in today's disinflationary
period and in 2010, discrepancies between PCE- and CPI-based inflation measures are primarily explained by their services components.
These price developments were disappointing and suggested to many members that the disinflationary
trend might have been arrested, at least for now, though the economic fundamentals remained consistent with a resumption of some further downward movement in the rate of inflation.
"While we continue to believe that there is some more scope for monetary easing, clarity on this will emerge only with incremental food inflation data, effect of monsoon on the disinflationary
path of inflation, and degree of volatility from global factors," Oswal said.
A synchronised global downturn affecting Asia and the euro area in particular, and amplifying global disinflationary
pressures; severe financial market stress with a reduction in global risk appetite, particularly in indebted economies, reductions in market liquidity, and some defaults of counterparties; and a slowdown in the UK driven by the downturn in its trading partners, fall in confidence, and correction in market risk appetite.
On Qatar's inflation, which according to the IIF is expected to remain low due to muted global price pressure and strong dollar, Maratheftis said a stronger Greenback is disinflationary
and it's a "double whammy" for countries that are more diversified.
"Given that there have been no substantial new developments on the disinflationary
process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank to await them and maintain the current interest stance," the central bank said in a statement.
The main factor behind the broad disinflationary
trend across the region has been a drop in global food prices.
"The price measures show very strong disinflationary
forces," said analysts at Nomura.
Meanwhile, the employment index declined further and disinflationary
pressure intensified," HSBC economist Qu Hongbin said in a statement accompanying the data.
With today's disinflationary
downdraft, wage growth can't gain any traction.