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Inflation is slowly creeping up as Singapore prepares to enter Phase 3

Jeffrey Tan
Jeffrey Tan • 2 min read
Inflation is slowly creeping up as Singapore prepares to enter Phase 3
The costs of services and electricity & gas saw a smaller decline amid higher food inflation.
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As Singapore is poised to enter Phase 3 of the reopening of its economy, the MAS Core Inflation and CPI-All Items inflation recorded -0.1% on a y-o-y basis in November, compared to -0.2% in October.

The slower rate of decline in November was mainly due to a smaller fall in the costs of services and electricity & gas, as well as higher food inflation.

Meanwhile, private transport and accommodation inflation stayed broadly unchanged in November compared to October.

These figures announced were by the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) on Dec 23.

For 2020, however, MAS Core Inflation and CPI-All Items inflation are forecast to come in between -0.5% and 0%, say MAS and MTI.


SEE: $63.7 bil Covid-19 package to be main stimulus for Singapore's economy as core inflation remains in the red, say economists

Next year, the MAS Core Inflation is expected to average 0% to 1%, while CPI-All Items inflation is projected to be between -0.5% and 0.5%.

MAS and MTI note that the disinflationary effects of government subsidies introduced this year will fade and the demand for some domestic services will gradually pick up.

Private transport costs should rise modestly, too, amid an anticipated reduction in the supply of Certificates of Entitlement (COEs) in 2021, they add.

Nevertheless, wages are expected to stay subdued in the coming quarters given the accumulated slack in the labour market.

Accommodation costs are expected to fall, too, as rentals could soften due in part to the decline in foreign employment, they note.

Meanwhile, external inflation is likely to remain low in the quarters ahead.

This will come amid weak demand conditions in key commodity markets and the persistence of negative output gaps in Singapore’s major trading partners, they say.

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