Singapore: Inflation predicted to remain subdued in 2020 – UOB

Economist at UOB Group Barnabas Gan assessed the inflation outlook for Singapore for the current year.

Key Quotes

“Singapore’s consumer prices fell 0.4% y/y (-0.3% m/m nsa) in July, marking its fifth straight month of deflation. Core prices also declined 0.4% y/y in the same month, clocking a deeper contraction versus June’s -0.2% y/y.”

“Deflation unsurprisingly persisted in July 2020 given the lacklustre consumer demand, lack of tourism spending, and lower oil prices.”

“Official rhetoric by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) continued to highlight a “subdued” inflation outlook in 2020. Official outlook for both headline and core inflation has been kept unchanged at an average of between -1.0% and 0.0% in 2020.”

“Notwithstanding the potential uptick in inbound travel, we continue to expect deflation pressures to persist for the rest of this year. The mix of falling domestic and tourism-led demand, coupled with low oil prices for the rest of 2020, are formidable headwinds against consumer prices. We keep our full-year headline and core inflation forecasts at -0.3% in 2020.”