CPI Upgraded, But No Major Problem

Following a jump in consumer price inflation in May to 6.5% y-o-y, the hest level since February 2010, we have upwardly revised our average CPI forecast for 2011 to 5.0% from 3.6% previously, and our end-year forecast to 5.5% from 4.0%. That said, plunging money supply growth, moderating commodity prices, and a moderation in regional economic growth should see a cooling in inflation to 3.5% (average) and 3.0% (end-year).

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