A slower-than-expected rise in Singapore's inflation rate could mean disinflation in one of the world's most expensive cities is here to stay, according to economists.
Data this week showed headline consumer price inflation (CPI) inched up an annual 0.1 percent last month, the slowest pace since 2009 and the fourth consecutive month of mild growth. Meanwhile, core inflation, which excludes housing and transportation, fell to an eight-month low with an annual 1.7 percent rise.
"We think dim prospects for a near-term relaxation of the central bank's macro prudential measures [in accommodation and private road transport] makes headline disinflation the trend," said Tim Condon, head of research at ING in a note.
In a report titled 'Singapore: Disinflation dynamic comes to the fore," economists from the Australia New Zealand Banking Group agreed; they expect headline inflation to remain subdued owing to the increase in supply of Certificates of Entitlement (COE) – the 10-year license that must be purchased to use a vehicle – and newly completed housing units.