The latest official data shows that Singapore’s primary consumer price index increased by 5% in March 2023, slightly less than expected.
The core inflation rate, excluding the cost of lodging and private transportation, increased by 5% in March compared to February’s 5.5% rise. According to a Reuters poll of economists, March’s growth rate would be 5.1%.
Inflation rates for services, food, retail, and other items were lower than they had been, according to a joint statement from the trade ministry and Singapore’s monetary authority (MAS).
Reuters’ survey predicted a 5.6% increase in headline inflation for March 2023, but the actual increase was 5.5% year over year.
An economist at Maybank Investment Banking Group named Lee Ju Ye stated that the slowdown was mainly due to the high base from the conflict in Ukraine since 2022 and its effects on food and energy costs.
While food and private transportation prices will probably continue to decline from 2022 levels, she said, “Accommodation costs seem to be peaking.”
“We do not expect MAS to further move in October and expect both headline and core inflation to gradually ease,” the expert added further.
In its review earlier in April 2023, the MAS kept its monetary policy settings steady, surprising economists who had anticipated another round of tightening due to the high inflation rate. This decision reflected concerns about the outlook for the economy.
It has also been predicted that core inflation will continue to rise in the following months but should gradually decrease in the second half of 2023 before ending the year much lower.
The central bank predicted that core inflation would run at 3.5% to 4.5% on average this year, while headline inflation would be higher at 5.5% to 6.5%.
Meanwhile, Singapore’s central bank had recently said that the country’s gross domestic product is expected to “moderate significantly” in 2023, and that prospects for growth in 2023 have “dimmed.”
The economy grew 0.1% in the first quarter compared with a year ago, according to the trade and industry ministry’s advance GDP estimates. However, compared with the previous quarter, GDP contracted by 0.7%, the first contraction since the second quarter of 2022.
As per the Monetary Authority of Singapore, global economic activity was “somewhat more resilient than expected” in the first quarter of 2023, with the fall in global energy prices, strong consumer demand in the advanced economies, and the lifting of pandemic restrictions in China.
However, MAS now expects that tighter financial conditions globally will lead to an intensified drag on global investment and manufacturing. The monetary body also sees the reopening demand boost in most regional economies tapering off over the course of the year.