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Khoon Goh, head of Asia research at ANZ, points out that the Singapore’s CPI data for March came in below expectations on both the headline and core measures.

Key Quotes

“The CPI-All Items inflation edged up to 0.6% y/y but fell short of market and our expectations. The miss relative to our forecast was due to softer prices across several components, where the usual post Chinese New Year bounce failed to materialise. This resulted in the MAS Core Inflation edging slightly lower than the previous month to 1.4% y/y in March.”

“The impact of the Open Electricity Market (OEM), which officially launched on 1 November 2018 and saw more areas covered on 1 March, had a much bigger impact in pushing down electricity prices than we first thought. By our estimate, the OEM alone is responsible for pushing down the MAS Core Inflation by 0.2ppts.”

“Firm labour market conditions will help support wage growth. But this is unlikely to create inflationary pressures at present. We expect to see core inflation edging slightly lower in the coming months and remain comfortably within the MAS’s 1-2% forecast range this year. Hence, the MAS looks set to leave policy settings unchanged for the rest of this year.”