Singapore’s core inflation shrank to its slowest rate in over three years last month, data published on Friday revealed.
 
The downbeat outcome drove authorities to lower their full-year forecast amid strengthening bids for monetary policy easing, Reuters reports.

The measure of core inflation climbed 0.8% compared to the previous year, the slowest pace since April 2016, as drops in prices for utilities and retail weighed heavily. It was also short of the 1.0% projection in a Reuters poll and the 1.2% increase recorded the month prior.

Authorities forecast core inflation – the favoured measure of the central bank which is set to meet in October – to come in the lower half of their 1%-2% estimate for this year, revised from a previous forecast which saw it coming in mid-range. 

Chief APAC economist at Moody’s Analytics Steve Cochrane said: “This is further evidence of the weakened condition of the economy.

“This will likely raise expectations of monetary policy easing… Particularly as many central banks in the region have already begun to ease monetary policy.”

Last week, the Monetary Authority of Singapore (MAS) said that following the country’s move to cut back its full-year growth outlook, it was not taking an out-of-cycle policy action into consideration. 

On the heels of the data being published, the Singapore dollar eased, falling roughly 0.2% against the greenback on the day. 

The headline consumer price index jumped 0.4% year-on-year in July, in keeping with January’s data, the lowest so far, this year. Poll forecasts saw a 0.55% increase, versus a 0.6% rise recorded the month prior. 

According to a joint statement released on Friday from MAS and the city-state’s trade ministry, Singapore’s headline rate is forecast to average 0.5%-1.5% for the duration of 2019.

“An acceleration in inflationary pressures is unlikely against the backdrop of slower GDP growth, uncertainties in the global economy, as well as the continuing restraining effects of MAS’ monetary policy tightening in 2018,” the authorities said.

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