Inflation in Singapore

Singapore - Inflation

Inflation and core inflation moderate in June

Consumer prices decreased 0.2% over the previous month in June, following the 0.7% increase recorded in May. According to data released by Statistics Singapore, the fall was primarily caused by lower prices for transport, communication and clothing and footwear, which was partially offset by higher food prices.

Inflation ticked down to 0.6% in June from May’s 0.9% and fell short of analysts’ expectations of 0.7%. Meanwhile, annual average inflation was stable at 0.6% in June.

The Monetary Authority of Singapore’s (MAS) core inflation measure, which omits the costs of accommodation and private road transport, inched down to 1.2% in June from 1.3% in May, matching analysts’ expectations.

Looking ahead, lower global oil prices relative to 2018 and weak domestic growth will continue to constrain inflation. However, increasing labor costs will provide some upward price pressure.

Commenting on how June’s print could play into the MAS’s future monetary stance, Khoon Goh, head of Asia research at ANZ, noted:

“We changed our call on MAS following the weak advance Q2 GDP release, and now expect an easing at their October review. With the weak NODX data last week and today’s CPI data showing continued moderation in core inflation, we maintain our view of a 50bp slope reduction of the policy band at the scheduled October review, though an earlier intra-meeting move cannot be ruled out.”

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 1.3%.