GEMs in the week: Inflation relief: Food, fiscal, forecasts, and now oil

Research evidence excerpt

GEMs in the week: Inflation relief: Food, fiscal, forecasts, and now oil

19 June 2026

GEMs in the week Multi-AssetEmerging Markets

Inflation relief: Food, fiscal, forecasts, and now oil

◆ Softer food inflation, widespread fiscal measures and elevated Edward Parker, CFA

expectations… Emerging Markets Strategist

HSBC Bank plc

edward.parker@hsbc.com

◆ …have helped most EM CPIs surprise to the downside in May +44 20 3359 7563

◆ Combined with lower oil prices, this could support high carry AliEmergingCakirogluMarkets Strategist

LCD markets through the summer HSBC Bank plc alicakiroglu@hsbc.com

+44 20 7991 0547

What’s driven the downside surprises to EM CPI in May? Ramya R S

EM assets moved broadly higher this week, particularly equities, as the US and Iran Emerging Markets Strategist HSBC Bank Middle East Limited, DIFC

signed a long-awaited deal to end the war and reopen the Strait of Hormuz ramya.r.s@hsbc.com

+ 971 4 509 3351

(Bloomberg, 18 June). While implementation risks remain (Oil market flash, 15 June

Rohit Mehboobani*

2026), these developments are clearly positive, with Brent crude falling to around Associate

USD80/bbl and marking a c.30% drop over the last four weeks. Bangalore

Such a sharp decline in energy costs, combined with a series of notable downside

surprises to the May CPI data, have brought the inflation debate back into focus. In * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations

fact, across the 22 EM economies we follow, the vast majority have surprised to the

downside. This has pushed our EM CPI surprise diffusion index, which measures the

net number of upside vs downside surprises to headline inflation, sharply into

negative territory for May (charts overleaf).