Singapore: Inflation revised lower in 2020 – UOB

Economist Barnabas Gan at UOB Group now expects the inflation in Singapore to rose less than previously estimated during the current year.

Key Quotes

“Singapore’s headline inflation came in at 0.8% y/y in January 2020, unchanged from December 2019. MAS Core inflation (which excludes private road transports and accommodation) was however markedly slower at 0.3% y/y in the first month of 2020, lower than 0.6% in December last year.”

“The official inflation outlook, as released in the accompanying inflation report, included the view on how COVID-19 could affect inflation in the months ahead. Specifically, MTI commented that “economic uncertainty, including the effects of the COVID-19 outbreak, will likely discourage firms from passing on any cost increases to consumers”… Despite the potential downward pressure COVID-19 could have on inflation, MTI nonetheless kept its headline and core inflation outlook unchanged at a range of between 0.5% and 1.5% for this year.”

“The deceleration in core prices also reinforces our view that the Monetary Authority of Singapore will likely ease policy in its April’s meeting, by reducing the S$NEER slope from the currently perceived +0.5% to neutral.”