Singapore’s headline CPI continued to rise but the pace eased further to 4.5% y/y (0.5% m/m NSA) in Jun, from 5.1% y/y (0.3% m/m) in May, coming off more than our expectations (UOB est 4.9% y/y) but slightly missing market expectations (Bloomberg est 4.4%). Core inflation also eased by a similar magnitude, coming in at 4.2% y/y in Jun, from 4.7% y/y in May and exactly in line with Bloomberg’s median estimates, but slightly above ours (UOB est: 4.0%). 

Our Inflation Outlook – While headline inflation is coming off slightly faster than expected, the moderation in the pace of core inflation remained in line with projection. As such, we now expect headline inflation to average lower at 4.7% (from previous forecast of 5.0%) while we continue to expect core inflation to average 4.0% in 2023. Excluding the 2023 GST impact, we now expect headline inflation to average 3.7% (from previous forecast of 4.0%) and core inflation to average 3.0% (unchanged) in 2023, both still above the “standard” 2% objective.