The National Bureau of Statistics is expected to release the March 2026 Consumer Price Index (CPI) report this week (April 15). Based on our estimates, headline inflation is projected to rise to 15.39% YoY, up from 15.06% in February, suggesting a pause in the recent disinflationary trend. The uptick is largely driven by renewed cost pressures from global energy markets, amid escalating tensions surrounding the US–Israel–Iran conflict.
On a month-on-month basis, inflation is forecast to accelerate sharply to 4.19%, compared to 2.01% in February, reflecting recent energy price adjustments and their transmission into transport and logistics costs. Our market survey indicates that while higher PMS prices have significantly impacted logistics costs, the pass-through to food prices remains relatively muted due to weak consumer purchasing power. Additionally, tighter credit conditions among retailers are constraining demand, further limiting price transmission.
Outlook and Policy Implications
The renewed uptick in inflation, particularly from cost-push factors, may reinforce a hawkish stance, limiting the scope for near-term monetary easing. Policymakers may prioritize price stability over growth support, especially if inflation expectations begin to re-anchor upwards.
In the fixed income market, the inflation surprise, particularly on a month-on-month basis, could trigger upward pressure on yields, as investors demand higher real returns. This may lead to bearish sentiment in the bond market. Increased yield in the fixed income market could weigh on the performance of the equities market.
