Singapore: Headline CPI surprised to the downside in October – UOB

UOB Group’s Senior Economist Alvin Liew comments on the latest release of inflation figures in Singapore.

Key Takeaways

“We expected inflation to slow in Oct but the pace of moderation took us by surprise. Headline CPI declined by 0.4% m/m NSA in Oct (versus Bloomberg median forecast of +0.2% m/m and offsetting Sep’s +0.4% m/m jump). That sequential pace of decrease translated into 6.7% y/y for headline CPI inflation in Oct (down from 7.5%), the lowest print in 5 months, matching Jun’s (6.7%).”

“Core inflation (which excludes accommodation and private road transport) continued to rise, but the pace eased, as it came in at +0.1% m/m, 5.1% y/y in Oct (from 0.5% m/m, 5.3% y/y in Sep), matching Aug (2022), and below the Bloomberg median and our expectation of 5.3%. The sources of core inflationary pressures were again broad-based with food inflation continuing strong, while the increases in services, retail & other goods and electricity & gas inflation stayed positive but slowed to varying magnitudes. As for the headline CPI inflation, other than upside to the core CPI, the accommodation costs increase stayed elevated, while private transport costs saw yet another significant moderation, which explains why the headline CPI corrected more than core.”

“Inflation Outlook – Despite the downtick in Oct inflation, the authorities maintained its inflation outlook and forecasts unchanged from the Sep CPI report. We keep our 2022 forecasts unchanged, 6% for headline (or CPI-All Items) and 4.2% for core, and we also maintain our current set of forecasts, for headline inflation to average 5.0% and core inflation to average 4.0% in 2023. Excluding the 2023 GST impact, we expect headline inflation to average 4.0% and core inflation average 3.0% in 2023.”