SINGAPORE ⸺ Singapore’s key price gauge rose by the fastest pace in more than a year in March, in part due to higher services inflation as well as smaller declines in retail and other goods, official data showed on Friday.
The core inflation rate — the central bank’s favoured price measure – rose to 0.5% in March from a year earlier, compared with 0.2% in the prior month. A Reuters poll of economists had forecast an increase of 0.4%.
Economists are keeping an eye on inflation data for any signs that may prompt the Monetary Authority of Singapore to tighten its policy as the economy recovers, but they said Friday’s data was still well within the central bank’s expectations.
Last week, the MAS kept monetary policy settings unchanged and said the accommodative stance was appropriate due to a benign inflation outlook and global economic uncertainties caused by the pandemic.
“It looks pretty difficult for them to normalise policy this year,” said Barclays regional economist Brian Tan.
For 2021, Singapore’s central bank expects core inflation to average 0% to 1%, while headline inflation is forecast to come in between 0.5% and 1.5%.
While inflation may pick up due to low base effects from last year, it was unlikely to accelerate in the second half of 2021 as business cost pressures are contained, the MAS said.
Singapore’s headline consumer price index spiked to 1.3% in March year-on-year — the fastest in nearly four years — from 0.7% in February.
Separately, Singapore’s private home prices rose 3.3% in January-March from the prior quarter, the fastest pace in more than two years, data from the Urban Redevelopment Authority showed, adding to expectations for more cooling measures.
Reporting by Aradhana Aravindan and Chen Lin in Singapore; Editing by Kim Coghill; Reuters