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Economist at UOB Group Barnabas Gan assesses the latest inflation figures in Singapore.

Key Quotes

“Singapore’s consumer price index rose for the second straight month at +0.2% y/y (0.0% m/m sa) in January 2021. This compares to market estimates for CPI to expand 0.2% y/y (-0.2% m/m sa). Core prices, however, fell for its 12th consecutive month at -0.2% y/y.”

“Similar to the previous readings, consumer prices were supported by food (+1.5% y/y), communications (+1.2% y/y) and household durables & services (+1.0% y/y).”

“The balance of risk for inflation in 2021 is likely tilted to the upside. The rebound in commodity prices, including Brent crude oil prices, could add to rising inflation risk. Coupled with the dissipation of disinflationary effects by government subsidies seen in 2020, Singapore’s electricity & gas tariffs will also likely pick-up in the year ahead. In line with the global economic recovery backdrop, domestic services prices and accommodation costs could also increase in 2021.”

“Still, the uncertainties surrounding COVID-19 and the negative impact it has on economic growth could mitigate price pressures.”

“In all, we expect both headline and core inflation to head higher and average a moderate 0.5% in 2021. This compares to the official outlook for headline inflation to range between -0.5% and +0.5%, and core inflation to average 0.0% to 1.0% in the year ahead.”

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