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Singapore’s June core inflation hits over two-year low

Published: July 23, 2019 13:22:13 | Updated: August 11, 2019 19:54:07


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The core inflation of Singapore hit a more than two-year low in June as electricity and gas prices declined, firming bets among economists that its central bank will ease monetary policy in October.

Official data showed on Tuesday that the country’s core inflation gauge in June rose 1.2 per cent from a year earlier, as expected by a Reuters poll.

This was the lowest since March 2017 when core inflation rate grew at the same pace, reports Reuters.

Edward Lee, an economist at Standard Chartered, said, “The risk of a monetary easing has definitely risen.”

“But this is not unexpected. We do expect a bottoming during this time,” he said.

Core inflation is the Monetary Authority of Singapore’s (MAS) preferred price gauge in setting monetary policy.

The central bank’s core inflation measure excludes changes in the prices of cars and accommodation, which are influenced more by government policies.

All-items consumer price index came in lower than expected as prices of services and retail inflation slowed.

Singapore’s headline inflation rose 0.6 per cent in June from a year earlier, lower than May’s 0.9 per cent rise.

The median forecast in a Reuters poll was for all-items CPI to rise 0.7 per cent.

Singapore’s economy grew at its slowest annual pace in a decade in the second quarter, preliminary data showed on July 12, raising bets that a technical recession and monetary policy easing could be just around the corner.

In a Reuters poll done after the release of the second-quarter data, seven of 11 economists said they expected the MAS to loosen its exchange-rate monetary policy in its next policy statement, due in October, with the other four forecasting no change.

Since then, two additional economists have called for a monetary easing amid a dim economic outlook.

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