EM LATAM CREDIT: Republic of Colombia: Downgraded by S&P

April headline inflation was unchanged at 2.4% y/y, slightly higher than expected, while the trimmed mean picked up 0.1pp to 2.8% y/y. The focus is on the latter as headline is likely to be impacted by government electricity rebates until year end. Underlying inflation has been sitting around 2.7/2.8% since December and the RBA expects 2.6% for Q2, which is released on July 30. 

• CPI ex volatile items & holiday travel rose 0.3% m/m seasonally adjusted to be up 2.8% y/y after 2.6% y/y in March. Seasonally adjusted headline rose 0.2% m/m and both showed a moderation in 3-month momentum but it remains above 3.5% annualised.
• Disinflation continues to be driven by goods & tradeables with annual inflation moderating to 0.9% y/y and 0.3% y/y respectively, as fuel prices fell further in April. Domestically-driven services & non-tradeables inflation picked up though to 4.1%, highest since November, and 3.6%, highest since August.
• Food & non-alcoholic beverage inflation moderated to 0.3pp to 3.1% y/y in April but housing rose 0.4pp to 2.2% y/y due to new dwellings. Rents eased to 5.0% y/y from 5.2%, the lowest since February 2023.
• Electricity fell 6.5% y/y in April after -9.6% y/y, as rebates in Queensland and WA have been used. Without all government subsidies, prices would have been up 1.5% y/y, according to the ABS.

Australia CPI y/y%

China must ensure GDP has a reasonable proportion of manufacturing value added by promoting industrial upgrading and strengthening independent innovation, said the Economic Daily in a commentary. Authorities should be vigilant after manufacturing fell to 26.2% in 2023 from 28.1% in 2016, the newspaper said, noting the sector was irreplaceable in driving economic growth and competing globally.

Chinese Premier Li Qiang called on members of the Association of Southeast Asian Nations (ASEAN) and the Gulf Cooperation Council (GCC) to work with China on building a large shared market with open trade and investment, Xinhua News Agency reported, citing the Premier’s recent speech at the inaugural ASEAN-China-GCC summit held in Kuala Lumpur. Following the completion of China-ASEAN Free Trade 3.0 negotiations, Beijing expects a fast resolution to the China-GCC free trade area agreement talks which will help elevate trilateral trade levels, Li added.