Tightening risks loom as Singapore July core inflation hits 13-year high
Singapore’s key consumer price gauge in July rose again at its fastest pace in more than 13 years, official data showed on Tuesday, mounting pressure on the central bank to consider another policy tightening move later this year.
The pick-up in inflation was mainly driven by stronger increases in the prices of food, electricity and gas, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry said in a statement.
The core inflation rate — the central bank’s favoured price measure – rose to 4.8% in July on a year-on-year basis. A Reuters poll of economists had forecast a 4.7% increase.
Headline inflation rose to 7%, matching economists’ forecast.
The core and headline inflation rates were 4.4% and 6.7% respectively in June.
Following July’s inflation data, three economists said they expect MAS to tighten monetary policy in their scheduled statement in October, but added the likelihood of another off-cycle tightening before then is low.
Singapore’s central bank has tightened its monetary policy three times this year, twice in surprise moves in January and July. It typically publishes two scheduled monetary policy statements a year, in April and October.
“My baseline case is still for another tightening at the scheduled October statement as inflation has not yet peaked and shown signs of stabilisation,” said Selena Ling, head of treasury research and strategy at OCBC.
The MAS’ core inflation forecast for this year is between 3% and 4%, while headline inflation is expected to come in between 5% and 6%.