Singapore: Inflation accelerated in March – UOB

UOB Group’s Economist Barnabas Gan reviews the latest inflation figures in Singapore.

Key Takeaways

“Singapore’s consumer prices rose at its fastest rate in a decade at 5.4% y/y (+1.2% m/m nsa) in Mar 2022. This is significantly faster compared to market expectations for a 4.7% y/y (+0.8% m/m nsa) print. Core inflation also accelerated to 2.9% y/y in the same month (Feb: +2.2% y/y).”

“Headline inflation has climbed for seven straight months, while core inflation stayed above the 2.0% handle for the fourth straight reading. In line with the recent MAS policy statement, authorities have upgraded their headline and core inflation forecast to 4.5 – 5.5% (from 2.5 – 3.5%) and 2.5% - 3.5% (from 2.0 – 3.0%) in 2022, respectively.”

“As discussed in our latest MAS policy and GDP report, we keep our headline inflation forecast to average 4.5%. Moreover, we expect core inflation to breach 3.0% for the rest of this year, and average 3.5% for the year.”

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 Singapore: Prospects for retail sales remain solid despite February drop

“Singapore’s retail sales unexpectedly contracted 3.4% y/y in Feb 2022, disappointing market estimates for a 5.6% y/y expansion. Retail sales excluding motor vehicles fell 1.8% y/y in the same month.”

“The decline in retail sales was partly due to lower receipts as compared to Feb 2021, during which sales were supported by pre-Chinese New Year (CNY) expenditure. For this year, pre-CNY spending occurred mainly in Jan 2022.”

“For the year ahead, we expect that domestic retailers will likely see some support as borders continue to reopen, while further economic recovery would be a lynchpin for domestic retail demand. Barring the exacerbation of COVID-19-related risks in Singapore and around the region, we pencil retail sales to expand by 6.0% in 2022.”

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