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

Key Takeaways

“Singapore’s consumer prices rose at its fastest rate since Feb 2013 at 4.0% y/y (+0.5% m/m sa) in Dec 2021. This is significantly higher compared to market expectations for a milder headline inflation rate of 3.7% y/y, albeit closer to our outlook of 3.9% y/y.”

“Inflation risks are still being felt at this juncture, given that headline inflation had accelerated for four straight months. Given the recent stronger-than-expected inflation readings, the authorities have refrained from publishing their full-year headline and core inflation outlook for 2022.”

“The higher-than-expected headline inflation as well as core inflation crossing the 2.0% handle reinforce our call for MAS to further normalise monetary policy in April 2022. Accounting for the perceived inflation drivers for 2022 amid higher inflation prints especially in 4Q21, we upgrade our headline and core inflation forecasts to 2.5% (from 2.0%) and 1.5% (from 1.0%) respectively for 2022 with upside risks.”