Inflation in Singapore

Singapore - Inflation

Inflation ticks up in April, but core inflation hits a one-year low

Consumer prices decreased 0.3% over the previous month in April, following the 0.1% fall recorded in March. According to data released by Statistics Singapore, the decline was primarily caused by lower prices for housing and utilities and clothing and footwear, which was partially offset by higher prices for transport.

Inflation accelerated to 0.8% in April, up from March’s 0.6% and matching analysts’ expectations. Meanwhile, annual average inflation ticked up to 0.6% in April from 0.5% in March.

In contrast, the Monetary Authority of Singapore’s (MAS) core inflation measure, which omits the costs of accommodation and private road transport, edged down to 1.3% in April (March: 1.4%). The reading matched market analysts’ expectations and marked a one-year low. The dip was likely partly due to the launch of the Open Electricity Market (OEM), which has depressed electricity prices.

Commenting on April’s print, economists at Nomura noted that higher prices for oil and vehicle registration permits “pose some upside risks to our 2019 headline inflation forecast of 0.3 (2018: 0.4%)”. However, they also added that: “We see downside risks to our core inflation forecast of 1.5% (2018: 1.7%), as demand-side conditions remained weak amid rising external headwinds and domestic structural constraints – high debt and deteriorating demographics.”

Looking ahead, our panelists see inflation rising on the back of the recent uptick in oil prices and stronger wage pressures. That said, they still see inflation remaining mild overall, dampened by the impact of the OEM, tepid economic growth and the MAS policy tightening last year.

In 2019, the MAS expects CPI inflation to average between 0.5% and 1.5%, and core inflation to average between 1.0% and 2.0%. FocusEconomics Consensus Forecast panelists, meanwhile, expect CPI inflation to average 0.9% in 2019, which is unchanged from the previous month’s forecast. In 2020, our panel expects average inflation of 1.4%.