Singapore’s core inflation for November dipped slightly, offering the central bank flexibility to extend its monetary policy pause in the upcoming month to bolster the economy. Official data revealed that core inflation increased by 3.2% from the previous year, signaling subdued consumer demand. This aligns with the consensus estimate from a Bloomberg survey of economists and represents a marginal decrease from the 3.3% pace recorded in October.
A joint statement from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry attributes the decline to lower inflation in retail and other goods, food, as well as electricity and gas.
The core inflation measure, excluding private road transport and accommodation, serves as a key indicator for MAS in determining policy settings. The central bank is scheduled to make its next monetary decision in late January.
Despite sustaining the Singapore dollar’s nominal effective exchange rate (S$NEER) on an appreciating trajectory, the MAS faces the challenge of balancing price stability goals with economic growth. While recent improvements in exports, manufacturing output, and electronics PMI are noted, lingering risks include China’s economic stabilization challenges and potential supply shocks from geopolitical conflicts such as the Red Sea attacks on shipping.
Earlier this year, Singapore’s government revised its growth forecast for 2023 to 1%, with expectations of expansion between 1% and 3% in 2024. To address evolving economic challenges, the MAS will reassess policy settings quarterly starting next month.
Additional Details:
- Food inflation eased to 4% year-on-year from 4.1% in October.
- Retail and other goods inflation cooled to 1% from 1.6% the prior month.
- Transport inflation moderated to 2.8% year-on-year, influenced by a slower rise in car prices, according to the Department of Statistics Singapore.
- MAS and the Ministry of Trade and Industry maintained their outlook for core inflation to average around 4% this year, with the all-items index averaging around 5%.
- Projections for 2024 include a forecasted core inflation range of 2.5%–3.5% and a broader measure in a range of 3%–4%.
- Separate data indicated a 1% year-on-year rise in factory output for November, following a revised 7.6% expansion in the previous month.
