SINGAPORE, July 25 (Bloomberg): Singapore’s key core inflation gauge jumped to the highest level in almost 14 years, boosting the case for the central bank to continue tightening monetary policy even after three moves this year.
The core inflation print, which excludes private transport and accommodation, rose by 4.4% in June from a year ago, according to a joint statement from the Monetary Authority of Singapore and the Ministry of Trade and Industry on Monday.
That’s the fastest since November 2008 and exceeds the median estimate in a Bloomberg survey for a 4.1% gain in prices.
Core inflation, which strips out accommodation and transport costs, and is the key measured tracked by the MAS -- is projected to peak in the third quarter, before easing toward the end of the year, according to the statement.
"The rise in core inflation reflected stronger price increases across the broad categories of services, food, retail and other goods, as well as electricity and gas,” the MAS and MTI said, referring to the June number.
The data supports the Monetary Authority of Singapore’s decision to tighten policy earlier this month, the third time this year, to tackle price pressures. Analysts see the inflation peak is still to come, after the central bank this month said the core measure will average between 3%-4% in 2022 from 2.5%-3.5% forecast previously.
"They would still have been surprised by how high this inflation print is,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group, referring to monetary policy makers. "With underlying inflation pressures still very strong, we see a need for further policy tightening at the October review.”
The all-items consumer price index gained 6.7%, compared with a median estimate of 6.2% in a Bloomberg survey, and 5.6% the previous month.
The central bank expects the all-items measure to surge between 5%-6% this year from the earlier forecast range of 4.5%-5.5%. - Bloomberg
