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UOB Group’s Economist Barnabas Gan assessed the latest inflation figures in the Singaporean economy.

Key Quotes

“Singapore’s consumer prices fell for its eight straight month by 0.2% y/y (-0.4% m/m nsa) in October 2020. This compares to September’s headline inflation at -0.01% y/y (+0.3% m/m nsa). Core prices also declined 0.2% y/y in the same month, down from -0.1% y/y in September 2020.”

“Factors that contributed to lower consumer prices included lacklustre consumer demand, non-existent tourism spending and low oil prices.”

“On the flip side, higher food, communication and household durables & services prices cushioned the overall decline in domestic consumer prices.”

“Official outlook for both headline and core CPI in 2020 are kept unchanged at between -0.5% and 0.0% in 2020. In 2021, official forecasts are pencilling headline CPI at a range of between -0.5% and +0.5%, while core CPI is projected at a range of between 0.0% and +1.0%.”

“While low consumer prices could still be seen for the rest of 2020, pockets of inflation from food, communications, and vehicle costs could effectively cushion the deflationary effects from other clusters. Nonetheless, low oil prices are likely here to stay amid an absent tourism-driven demand at least for the rest of 2020. As such, we keep our full-year headline and core inflation forecasts at -0.3% in 2020. However, we look for headline CPI to turn positive at +0.5% y/y in 2021, given the better global economic backdrop then which should support consumer demand.”

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