Singapore: Did inflation peak in April? – UOB

Barnabas Gan, Economist at UOB Group, comments on the results of inflation figures in Singapore.

Key Takeaways

“Singapore’s consumer prices rose 5.4% y/y (-0.1% m/m nsa) in Apr 2022, marking the first month-on-month contraction in 9 months. The rate of increase is also markedly lower compared to market expectations for a 5.7% y/y (+0.2% m/m sa) climb. Core inflation however accelerated to 3.3% y/y in the same month, from 2.9% in Mar 2022.”

“Notwithstanding the inflation risks seen at this juncture, the climb in headline CPI at 5.4% y/y was significantly overshadowed by the pace of increase in global commodity prices. This suggests the effectiveness of Singapore’s monetary policy, whereby the Monetary Authority of Singapore (MAS) has lifted the S$NEER gradient in the last three policy statements.”

“Inflation risks remain magnified on the back of higher global commodity prices. We keep our headline and core inflation forecasts to average 4.5% and 3.5% in 2022 respectively. This is in line with the official outlook for both headline (4.5 – 5.5%) and core inflation (2.5% - 3.5%) for this year. We also expect MAS to further steepen the S$NEER gradient slightly in its upcoming Oct policy statement, while leaving the width of the band and the level at which it is centred unchanged.”