Mar 23, 2023
Singapore Core Inflation Holds Pace at 14-Year High in February
(Bloomberg) -- Singapore’s core inflation, a key barometer for the central bank, kept its 14-year-high pace in February as officials weigh fresh threats to the global economy amid the Federal Reserve’s resolve to stay the course on tightening.
The core measure, which excludes private transport and accommodation, rose 5.5% from a year earlier, according to a joint statement from the Monetary Authority of Singapore and the Ministry of Trade and Industry released Thursday. That compares with a 5.8% median estimate in a Bloomberg survey.
The MAS, which is scheduled to deliver its next policy decision in April, will have to consider elevated inflation against greater uncertainties in the global economy after the Fed prioritized price stability.
The trade-reliant city-state remains exposed to external challenges, even as authorities have tried to shield lower-income households from soaring costs, including food staples.
Singapore’s dollar saw little reaction to the lower-than-expected February inflation figures, with the currency trading 0.4% stronger against the US dollar. That increases the odds for MAS to keep policy unchanged in April.
“Our longstanding base case has been for no further tightening from the MAS this year as core inflation has likely not exceeded the central bank’s projections,” which had already taken January GST hike into account, said Brian Tan, senior economist at Barclays Plc in Singapore.
The MAS, which uses the exchange rate as its main tool, has tightened policy five times since October 2021.
The MAS and MTI expect Asia’s growth resilience to contribute to regional inflation, with Singapore’s non-oil import prices seen remaining relatively firm for some time.
They reiterated their forecast for core inflation to stay above 5% in the first quarter, and expect it to remain elevated in the first half of the year before slowing more discernibly in the second.
Other details from Thursday’s print:
- Overall CPI rose 6.3% in February from a year earlier; estimate was for 6.4% gain
- Food prices were unchanged from last month’s 14-year high of 8.1%
- Education and healthcare prices rose at 2.9% and 4% clips, respectively
- MAS and MTI reiterated projections for 2023 headline and core inflation, seeing ranges of 5.5%–6.5% and 3.5%–4.5%, respectively
--With assistance from Tomoko Sato, Marcus Wong and Chester Yung.
(Updates with chart after the second paragraph and economist comments in the sixth.)
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