Senior Economist at UOB Group Alvin Liew assesses the latest inflation figures in Singapore.

Key Quotes

Singapore’s headline inflation rose by 5.1% y/y in May, easing from 5.9% y/y in Apr, coming off more than expected (UOB est 5.9% y/y, Bloomberg est 5.4%). That said, core inflation also eased but at a smaller magnitude, coming in at 4.7% y/y in May, from 5.0% y/y in Apr and exactly in line with UOB and Bloomberg median estimates.  

Official inflation outlook unchanged: The Monetary Authority of Singapore (MAS) kept its inflation forecasts (that were first made in the 14 Oct 2022 MPS) unchanged in the May CPI report, as the Authority expects that in 2023, after taking into account all factors including the GST increase, core inflation will be at 3.5–4.5% on average over the year, and CPI-All Items inflation at 5.5–6.5%. Even after excluding the one-off effects of the GST increase early next year, core inflation would be at 2.5–3.5% and headline inflation at 4.5–5.5%. The MAS expects core Inflation “to moderate further in H2 2023” and again it did not give a year-end point forecast. (Previously, the MAS mentioned that “MAS Core Inflation is projected to reach around 2.5% y-o-y by the end of 2023”.) The MAS continued to cite both upside and downside risks to inflation.