The Singapore CPI increased in January and is anticipated to continue to be high.

Investment.com — According to data released on Thursday, consumer inflation in Singapore increased in January and is expected to continue to rise in the near future due to high import costs, a tight labour market, and robust domestic demand.

Nonetheless, despite the Monetary Authority of Singapore (MAS) having significantly tightened policies over the previous year, inflation increased at a somewhat slower rate than anticipated in the month.

The core consumer price index (CPI), which excludes prices for personal travel and lodging, increased by 5.5% on a yearly basis in January, exceeding the 5.1% observed in December but falling short of the 5.6% predicted. The reading is the MAS’s chosen inflation indicator.

According to a statement from the MAS, core inflation increased 0.8% over the previous month.

The overall CPI inflation rate increased by 6.6% y-o-y in January, which is higher than the 6.5% data from December but below the 7.1% growth estimate.

Pricing pressures in the nation remained high, partly due to its high reliance on imported food and fuel. Like most import-dependent economies, Singapore is currently suffering from the repercussions of Russia’s invasion of Ukraine.

But a tight local labor market, along with strong wage growth, has also driven increases in inflation by keeping demand robust. The MAS said that this trend is likely to continue in the coming months, and forecast core inflation above 5% in the first quarter of 2023.

According to a statement from the MAS, “(Inflation) will stay elevated in H1 2023 before dropping more noticeably in H2 2023 as the current tightness in the local labour market eases and global inflation moderates.”

With pressure from a 1% increase in Singapore’s goods and services tax, the MAS also predicted core inflation in 2023 to range between 3.5% and 4.5%.

The financial authority also issued a warning about inflationary risks on the upswing caused by a rise in market shocks for commodities as well as stronger and longer-lasting domestic demand.

The inflation reading received minimal reaction from the Singapore dollar.

source from: msn.com