By Bing Hong Lok
SINGAPORE (Reuters) -Singapore’s key consumer price gauge rose 1.8% in December from a year earlier, more than economist forecasts and the lowest in more than three years, official data showed on Thursday.
The core inflation rate, which excludes private road transport and accommodation costs, was above the 1.7% forecast by a Reuters poll of economists and the 1.9% rate seen in November.
Headline inflation was 1.6% in annual terms in December, higher than economists’ forecast of 1.5%.
The Monetary Authority of Singapore said it would update its core and inflation forecast ranges for the year in Friday’s scheduled monetary policy review.
OCBC economist Selena Ling said this update was unusual and may portend a shift in the official inflation forecasts, “possibly shaded lower to 1% to 2%” from the current 1.5% to 2.5%.
Ling said the inflation rhetoric from the central bank “sounds slightly more dovish” and she expected to see a flattening of the exchange rate-based policy band known as the Nominal Effective Exchange Rate, or S$NEER, at its next monetary policy review scheduled on Friday.
Inflation has declined from a peak of 5.5% in early 2023 and December’s rate is the lowest since November 2021, when it rose by 1.6%.
Maybank analysts said inflation was now comfortably below 2% and they also expect the MAS to ease monetary policy via a slight reduction of the S$NEER slope.
Analysts polled by Reuters earlier were split on whether the central bank would wait to assess the impact of U.S. President Donald Trump’s policies or ease monetary policy.
Singapore’s economy did better than expected in 2024 with 4% growth in advance estimates, after slowing to 1.1% in 2023 from 3.8% in 2022.
The MAS has not changed policy since a tightening in October 2022, which was the fifth in a row, as broader concerns about growth kept authorities sidelined.
It last eased policy in March 2020 as Singapore braced for a recession with COVID-19 spreading worldwide.
The trade ministry is expecting growth of 1.0% to 3.0% in 2025.
(Reporting by Bing Hong Lok and Xinghui Kok; Editing by Martin Petty and Tomasz Janowski)
