Singapore’s Core Inflation Eases: A Sign of Economic Stabilization

Last updated: 2023/12/26 at 4:08 PM

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In a significant development for Singapore’s economy, November 2023 marked a notable easing in the country’s core inflation rate. Falling to 3.2% year-on-year, this decrease from October’s 3.3% rate signals a potential stabilization in the economic landscape of the city-state.

Contents

Details of the Inflation Slowdown Implications for Monetary Policy Economic Outlook Conclusion

Details of the Inflation Slowdown

Core Inflation Rate: The core inflation rate, which excludes the costs of private road transport and accommodation, slowed to 3.2% in November, down from 3.3% in October. This rate is a key indicator, as it strips out some of the most volatile components of the Consumer Price Index (CPI).
Headline Inflation Rate: In contrast to the core inflation rate, the headline inflation rate for November stood at 3.6%, lower than economists’ forecast of 3.8% and a decrease from the previous month’s 4.7%. This broader measure includes all CPI components.
Factors Contributing to the Decrease: The easing of inflation was attributed to lower inflation rates for retail and other goods, food, as well as electricity and gas costs. Additionally, a decrease in private transport inflation contributed to the overall decline.

Implications for Monetary Policy

The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) have jointly stated that both headline and core inflation are projected to average between 3.0–4.0% and 2.5–3.5%, respectively, in 2024. The central bank is set to review its monetary policy settings in the coming months, with changes in frequency from semi-annual to quarterly policy reviews.

Economic Outlook

The easing of inflation is a positive sign for Singapore’s economy, suggesting a moderation in price pressures. However, the MAS and MTI remain vigilant, monitoring global economic developments and their impact on domestic inflation.

Conclusion

The decrease in Singapore’s core and headline inflation rates in November 2023 offers a glimpse of potential economic stabilization. While the future economic outlook remains cautiously optimistic, the current trend suggests a gradual return to normalcy following the heightened inflation experienced earlier in the year. As 2024 approaches, Singapore’s economy appears to be on a path of steady, albeit cautious, recovery.

Also learn about Real Incomes Fall Amid High Inflation.