ASEAN KEY DESTINATIONS
Singapore’s core inflation slows in October
SINGAPORE’S core inflation slowed more than expected in October, keeping alive worries about deflationary pressures with global and domestic economic growth remaining sluggish.
The weak inflation indicators come two days before data on the city-state’s third-quarter gross domestic product (GDP), which is expected to show economic growth stalled in the quarter with GDP unchanged from the prior quarter.
The Monetary Authority of Singapore’s (MAS) core inflation gauge, which the central bank uses to set policy, rose 0.3 per cent in October from a year earlier, official data showed on Monday. The median forecast in a Reuters survey was a 0.5 per cent rise.
In September, the core inflation gauge had risen 0.6 per cent, the fastest pace in six months.
Core inflation may even turn negative in November, given a slowdown in Singapore’s economy, said Vaninder Singh, an economist for RBS in Singapore.
“But I think what’s important for monetary policy settings going into the next six months is what we see on the growth end,” Singh said.
“What we need to see is if we’re going to get any kind of growth rebound in Singapore. At this stage, we don’t think that will be the case and we might see further (monetary) easing.”
Singh said that such policy easing could even occur before the next scheduled MAS bi-annual policy review in April.
Against a backdrop of low inflation and tepid global growth, Singapore’s central bank has eased monetary policy twice this year, most recently in October.
The core measure excludes private road transport costs and accommodation, which can be influenced more by administrative policies. Core inflation has slowed this year due to the impact from lower oil prices, as well as healthcare subsidies and other government measures that have helped temper services costs.
In their monthly joint statement on consumer prices, the MAS and the Ministry of Trade and Industry said the easing in core inflation in October mostly reflected the impact of lower electricity tariffs and prices of retail items.
The all-items consumer price index fell 0.8 per cent in October from a year earlier, the 12th straight month in which headline CPI has fallen year-on-year. The median forecast in the Reuters survey was for headline CPI to fall 0.5 per cent.
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