Singapore: High inflation still seen as transitory – UOB

Economist at UOB Group Barnabas Gan assesses the recently published inflation figures in Singapore.

Key Takeaways

“Singapore’s consumer prices rose 2.5% y/y (-0.2% m/m nsa) in July 2021, in line with market estimates This is the seventh straight month where Singapore’s saw higher consumer prices from a year ago, while the latest print was slightly faster than June’s inflation pace of 2.4% y/y (0.0% m/m sa). Accounting for the latest data, Singapore’s consumer prices rose 1.7% in the first seven months of 2021.”

“Singapore’s core inflation also accelerated to 1.0% y/y in July 2021 (from June’s 0.6% y/y), the fastest pace since June 2019.”

“Official estimates for headline inflation is maintained at a range of between 1.0% and 2.0% for 2021, a forecast that was upgraded from an outlook of between 0.5% and 1.5% in the previous CPI report. Official core inflation expectation is also kept unchanged at a range of between 0.0% and 1.0%.”

“We keep to our view that inflationary pressures should stay transitory for the year ahead.”

“We keep to our headline and core inflation outlook of 1.4% and 1.0% for 2021, respectively. However, we recognise some upside risk to our full-year headline inflation given Singapore’s overall positive domestic economic prognosis and elevated external inflation pressures.”