Easing of Inflationary Pressures

In tandem with falling commodity prices and weak demand, global inflation decelerated significantly since mid-2008. Headline consumer price index (CPI) inflation in the G3 economies peaked in July 2008, before tumbling to -0.1% in April 2009. In May, CPI inflation fell to -1.3% in the US, the lowest since 1950.

In Asia ex-Japan, CPI inflation fell from a peak of 7.1% in June 2008 to 0.4% in April 2009. This was mainly due to lower energy prices which, on average, accounted for two-thirds of the decline in inflation between Q3 and Q4 in 2008. Slower food price increases also contributed significantly to the reduction in inflation over this period.