Friday, July 3, 2009
the fake sharp drop
As predicted, people is amazed on sharp drop of yoy inflation from 6,04% to 3,65% which announced by statistics body yesterday. But, If we take a closer look to the data, the above 2% decline of yoy inflation is affected more by mtm deflation on early 2009, sharp rise of commodity prices on Q2-Q3 2008, and several colleagues suggest that it is related to base year change. So, the sharp drop of May-June inflation only explains economic condition in the past, but for now it is merely a technical issue, not economic. I predict that “the fake downward trend of May-June inflation” will continue to minimum on Q3-09. Future inflation (6mo to 1 year), will be slightly higher as economy recovers that expected, cyclical effects, and a technical issue (again).