Deflation could be the next scenario in Singapore for the current year, suggests Economist at UOB Group Barnabas Gan.
Key Quotes
“Singapore’s inflation environment has softened significantly in February 2020. Headline inflation decelerated to 0.3% y/y in February (down from 0.8% in January 2020), the slowest pace in seven months, while core inflation fell to -0.1% y/y, the first negative print since January 2010 (-0.5% y/y).”
“Across the clusters within the CPI baskets, headline inflation has been dragged by a mix of disinflation and deflation.”
“The inflation outlook continues to stay dampened by lower oil prices amid the COVID-19 pandemic.”
“The deceleration in core prices also reinforces our view that the Monetary Authority of Singapore will likely ease policy to neutral in its April’s meeting, down from a currently perceived +0.5% appreciation slope.”
“Given the rapid slowdown in domestic price pressures due to lower oil prices and COVID-19 concerns, we perceive that a full-year deflation in 2020 is possible. As such, we downgrade both our full-year headline and core inflation to -0.3% in 2020, down from our initial outlook of 1.0% (headline) and 1.2% (core).”
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