Singapore’s core inflation rate eased to 0.6% year-on-year in May, down from 0.7% in April, as reported by Nomura’s Asia ex-Japan Daily Research Summary. This decline aligns with expectations and is attributed to falling raw food price inflation. Despite this easing, core-core inflation remained stable, indicating underlying inflationary pressures are unchanged.
Nomura analysts Euben Paracuelles and Charnon Boonnuch maintain their 2025 core inflation forecast at 0.7%, reflecting anticipated easing in labour market conditions. However, they caution that sustained surges in oil prices could present upside risks to this forecast. The Monetary Authority of Singapore (MAS) has kept its 2025 forecast range unchanged at 0.5-1.5%, though it has highlighted increased uncertainty in the economic outlook.
Headline inflation also saw a slight decrease, dropping to 0.8% from 0.9% in April. This was in line with consensus expectations but slightly below Nomura’s forecast of 0.9%. The decline in headline inflation was primarily due to a reduction in private road transport inflation, which fell to 1.1% from 1.3%, despite an increase in certificate of entitlement (COE) premiums.
The report underscores the complexity of inflation dynamics in Singapore, with various factors such as raw food prices and transport costs influencing the overall inflationary environment. As the year progresses, the interplay between these elements and external factors like oil prices will be crucial in shaping the inflation outlook.
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