Singapore: Deflation seen unabated in H2 2020

Economist at UOB Group Barnabas Gan reviewed the latest inflation data in Singapore.

Key Quotes

“Singapore’s headline consumer prices fell 0.5% y/y (0.0% m/m nsa) in June 2020, marking its fourth straight month of deflation. Core prices also fell by 0.2% y/y over the same period (similar to the -0.2% y/y print in May 2020).”

“Deflation unsurprisingly persisted in June 2020 given the lacklustre domestic demand and lower oil prices. Across the segments, transport costs fell for its third straight month by 3.1% y/y in June, led by a decline in global oil prices even as Brent oil contracted 35.4% y/y in the same month. Falling demand for retail goods and services have also dampened other price segments such as Clothing & Footwear (-3.2% y/y), Recreation & Culture (-2.9% y/y), and Miscellaneous Goods & Services (-1.9% y/y).”

“Official rhetoric by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) as released in the accompanying inflation report continued to highlight a ‘subdued’ inflation outlook in 2020.”

“We continue to expect deflation pressures to persist in the second half of 2020. 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. Higher food prices, which account for 21.1% of the total CPI basket, may well be insufficient to inject any sizeable uptick in overall consumer prices for the year ahead. With the anecdotal evidence pointing at a resurgence in COVID-19 cases in some of Singapore’s key trading partners, the risks of tightening social restrictions seen across parts of Asia could suggest that any return of inbound tourism in Singapore may be off the table for the foreseeable future.”

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.