(Bloomberg) -- Singapore’s core inflation slowed more than expected in July, opening the room for the island’s central bank to consider loosening monetary policy settings later this year.
Core prices, which exclude private transport and accommodation costs, rose 2.5% from a year ago, according to a statement from the Department of Statistics Singapore on Friday. That was slower than the 2.9% median estimate in a Bloomberg survey of economists, and the slowest pace since February 2022.
The all-items inflation came in at a slower-than-expected 2.4%, matching the pace in June. On a month-on-month basis, the headline measure declined 0.3% after a 0.2% decrease in the prior month.
While the MAS forecasts the trend of slowing price gains to continue, the steeper than expected cooling allows policymakers the room to weigh monetary policy easing when it reviews settings next in October. The monetary authority, which uses the exchange rate as its main policy tool rather than interest rates, has for now maintained that the current tight settings remain appropriate.
It previously said that core inflation is expected to slow “further to around 2% in 2025” after averaging 2.5%–3.5% this year.
The overall disinflationary trajectory should bode well to open up a potential monetary policy easing window in the months ahead, said Selena Ling, chief economist at Oversea-Chinese Banking Corp Ltd. The October 2024 and January 2025 MAS policy meets are potential windows to watch for a possible easing move, she said.
--With assistance from Shinjini Datta.
(Updates with economist voice in the sixth paragraph.)
©2024 Bloomberg L.P.
