Singapore’s Consumer Price Gauge Rises 1.8% in December
Singapore’s key consumer price gauge rose 1.8% in December from a year earlier, exceeding economist forecasts and marking the lowest level in more than three years. The core inflation rate, which excludes private road transport and accommodation costs, was also higher than expected, at 1.9% in annual terms.
The headline inflation rate was 1.6% in annual terms in December, above the 1.5% forecast by economists. The Monetary Authority of Singapore (MAS) will update its core and inflation forecast ranges for the year in its scheduled monetary policy review on Friday.
The update is unusual and may signal a shift in the official inflation forecasts, possibly to a range of 1% to 2%, down from the current 1.5% to 2.5%. The MAS’s inflation rhetoric has also become slightly more dovish, and analysts expect to see a flattening of the exchange rate-based policy band known as the Nominal Effective Exchange Rate (S$NEER) at the next monetary policy review.
Inflation has declined from a peak of 5.5% in early 2023 and December’s rate is the lowest since November 2021. Maybank analysts believe inflation is now comfortably below 2% and expect the MAS to ease monetary policy via a slight reduction of the S$NEER slope.
Singapore’s economy performed better than expected in 2024, with 4% growth in advance estimates, following a slowdown to 1.1% in 2023 from 3.8% in 2022. The MAS has not changed policy since a tightening in October 2022, and analysts are split on whether the central bank will wait to assess the impact of U.S. President Donald Trump’s policies or ease monetary policy.