Singapore CPI moderates in October, but economic outlook darkens

By Amber Warrick — Singapore’s inflation eased more than expected in October thanks to fewer supply chain issues and cooling commodity prices, but the country still expects economic growth to slow in 2023 due to to growing global headwinds.

Singapore’s core consumer price index, the Monetary Authority’s (MAS) preferred inflation gauge, rose 5.1% in October, below expectations of 5.3%, as well as the September reading, data showed on Wednesday.

Including items like private transportation and lodging costs, headline inflation grew 6.7% in October, well below estimates of 7.1% and last month’s reading of 7.5%.

The cooling off of price pressures indicates that the monetary tightening measures undertaken by the MAS this year are paying off. Easing supply chain issues and more stable commodity markets also helped reduce price pressures in the island state.

Still, inflation remains relatively high, and the MAS forecasts that high labor costs and persistent tight supply will keep inflation high in the near term. The MAS maintained its outlook for 2022 for core and headline inflation at 3.5% to 4.5% and 5.5% to 6.5%, respectively, although it had raised its forecast in September.

But Singapore’s economic prospects appear to have deteriorated further. The Ministry of Trade and Industry (MTI) said in a separate announcement that the island state’s gross domestic product is expected to rise between 0.5% and 2.5% in 2023, a substantial decline from the 3-year growth forecast. .5% by 2022.

The MTI also said that GDP grew 4.1% in the third quarter, below the government’s advance estimate, while the 3.5% forecast for 2022 was slightly lowered from a previous range of 3% to 4%. .

The gloomy forecast comes amid rising inflationary pressures this year, as well as weakening global demand for the island state’s major industrial and electronics exports.

Singapore’s non-oil exports, a key driver of economic growth, have fallen sharply this year amid weakening demand, especially in main trading partner China.

The economy also came under pressure from tightening monetary conditions, with the MAS tightening policy for the fifth time in 12 months in October.

The Singapore dollar reacted negatively to the CPI and GDP data, slightly deepening its losses to trade 0.3% lower against the dollar.

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