Despite growing risks to economic development, Singapore's core inflation measure dropped in October 2022 for the inaugural point in eight months. This gave policymakers a reason to hold off on monetary tightening.
Based on a joint declaration from the Monetary Authority of Singapore and the Ministry of Trade and Industry on November 23, 2022, core inflation, which exempts private transportation and lodging and is closely monitored by the central bank, increased by 5.1% from a year earlier. That was below both the median estimate of 5.3% growth among economists and the rate in September, which was the fastest since November 2008.
According to the statement, reduced rises in the costs of electricity and gas, retail, and other products and services were what moderated core inflation. However, the consumer price index in Singapore increased drastically this year 2022 at 6% compared to 2.3% last year 2021, according to GlobalData.
Moreover, in comparison to 7.5% the month before, the consumer price index for all categories increased by 6.7% from the prior year 2021. The information provides decision-makers room to consider pausing monetary tightening in 2021 after five movements since October of last year. Data on the gross domestic product released earlier on November 23rd, 2022, which revealed third-quarter growth was weaker than previously anticipated and expansion will likely fall drastically the next year 2023 due to a worldwide downturn, strengthened the case for refraining from making any more modifications. Apparently, the real GDP growth in Singapore this year 2022 fell to 3.2% from 7.6% last year 2021, according to GlobalData.
The statement predicts that the core gauge will be around 4% and that overall inflation would be around 6% on average in 2022. Related to the iterative rise in the goods and services tax, it is anticipated that both measures will average 5.5%-6.5% and 3.5-4.5% in 2023, respectively.
In the coming quarters, the core inflation rate is expected to remain high before "decelerating increasingly noticeably" in the second half of 2023 as local labor market tightness calms and global inflation reduces, according to the statement.
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