The threat of deflation stalks Asia's economies

Just as the inflationary heat is rising again in America, much of Asia is feeling a chill.

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Leave aside the hotspots—Japan and Bangladesh—and the average rate across the continent's ten biggest economies is a tame 1.3%.

Consumer prices have fallen outright in China, the biggest of all, and in Thailand. Other Asian economies, including the Philippines, are not far from deflation. Even in inflation-prone India, prices rose by just 1.6% in the year to July, the slowest rate since 2017. In some Asian economies, inflation is within central bankers' target ranges. But in five, it is now below these, and even in on-target countries the trend is disinflationary.

It is tempting to blame Donald Trump's tariffs. In theory, they should hit Asia as a demand shock, reducing both export prices and output. That, though, is not what has happened in recent months. Instead, firms "frontloaded" shipments before the tariffs came into force, with the result that many Asian countries' exports to America soared. And Asia's missing inflation in any case dates back to the second half of 2024, before Mr. Trump was re-elected. His tariffs might tug down prices in the future, but they do not explain the past year.