Singapore faces further deflationary pressure – UOBC
|Economist at UOB Group Barnabas Gan assessed the recent inflation figures in Singapore.
Key Quotes
“Singapore’s consumer prices fell 0.4% y/y (+0.6% m/m nsa) in August, marking its sixth straight month of deflation. Core prices also declined 0.3% y/y in the same month, albeit a smaller contraction versus July’s -0.4% y/y.”
“Deflation unsurprisingly persisted in August 2020 given lower oil prices, amid a lacklustre consumer demand and a non-existent tourism spending. Lower prices in clothing & footwear continued (17th straight month of decline), while transport prices softened for its 5th consecutive month.”
“Official rhetoric by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) continued to highlight a “subdued” inflation outlook in 2020. Official outlook for both headline and core inflation has been kept unchanged at an average of between - 1.0% and 0.0% in 2020.”
“Note that improving global supply conditions may cap the increase in food prices going forward. Low oil prices will likely persist into 2020/2021, amid relatively weaker labour condition which could pressure domestic consumption demand.”
“As such, we continue to expect deflationary pressures to persist for the rest of this year. The mix of falling domestic and tourism-led demand, coupled with low oil prices for the rest of 2020, are formidable headwinds against consumer prices. We keep our full-year headline and core inflation forecasts at -0.3% in 2020.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.