{"id":120605,"date":"2021-06-24T02:28:58","date_gmt":"2021-06-23T19:28:58","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/property-news\/analysts-believe-hike-in-inflation-still-at-manageable-level\/"},"modified":"2021-07-18T17:03:29","modified_gmt":"2021-07-18T10:03:29","slug":"analysts-believe-hike-in-inflation-still-at-manageable-level","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/analysts-believe-hike-in-inflation-still-at-manageable-level\/","title":{"rendered":"Analysts believe hike in inflation still at manageable level"},"content":{"rendered":"


\nAnalysts believe hike in inflation still at manageable levelCore inflation, which excludes accommodation and private road transport costs, is still believed to be at manageable levels.\u00a0
\nDespite the increase in consumer prices in May \u2013 in which all-items inflation hit its highest level since end-2013 \u2013 analysts still do not expect the Monetary Authority of Singapore (MAS) to normalise currency settings until April next year, reported The Business Times (BT).
\nThis comes as core inflation, which excludes accommodation and private road transport costs, is still believed to be at manageable levels.
\n\u201cI don\u2019t think inflation is a cause of concern just yet, nor it\u2019s likely to be anytime in the foreseeable future,\u201d ING Senior Economist for Asia Prakash Sakpal told BT.
\nWith this, the MAS is expected to leave the currency setting unchanged during its October review.
\nHeadline inflation rose to 2.4% in May from 2.1% in the previous month, while core inflation climbed to 0.8% from 0.6%.
\nIn a joint statement, the MAS and Ministry of Trade and Industry (MTI) attributed the hike partly to a year-ago low base, when the city-state was in a quasi-lockdown.
\nSakpal added that the increase in consumer prices is also due to supply-side factors, like oil price, while \u201cthe demand side pressure remains muted amidst resurgent COVID-19 spread\u201d.
\nMaybank Kim Eng economists Lee Ju Ye and Chua Hak Bin still expect inflation to peak in July, rising at about 3% for all item prices and 1.3% for inflation.
\nThe duo raised their full-year forecasts, with core inflation projected to hit 1% this year, up from their earlier estimate of 0.9%, before increasing further to 1.4% next year.
\nUOB economist Barnabas Gan noted that the city-state witnessed a \u201cpersistent deflation environment in the period between April and Nov 2020, on the back of a relatively weaker economic environment and low oil prices then\u201d.
\n\u201cAs such, the rise of consumer prices may continue to be observed in the months ahead, although it is expected to be transitory when the base effects eventually dissipate,\u201d he said as quoted by BT.
\nMeanwhile, Oxford Economics Analyst Jung Sung Eun pointed that over three-quarters of the hike in inflation comes from the transport component alone.
\n\u201cWhile this will push up headline inflation, MAS core inflation lies well below 2%,\u201d she said as quoted by BT.
\nHigher oil prices pushed private road transport inflation to 14.5% in May, while a hike in housing rent drove accommodation costs to 0.9%.
\nRecommended read:\u00a05 Most Popular HDB Estates Among Resale Flat Buyers (Our Top Agents Reveal Why) \u00a0
\nService inflation stood at 1.4%, following an increase in point-to-point transport, telecom services and health insurance costs.
\n\u201cOn the flip side, the absence of tourism-led demand continued to pressure retail prices lower. Prices related to consumer goods were generally weaker,\u201d said Gan as quoted by BT.
\nIn May, the cost of retail and other goods dipped 0.8% year-on-year, as a 4.1% drop in clothes and shoes prices offset the 2.4% hike in household durables.
\nHSBC Economist Yun Liu warned that a rapid hike in accommodation costs may indicate \u201csurging property prices\u201d within the market.
\n\u201cMAS normalisation is unlikely this year, but it may opt to consider macroprudential tightening to curb price growth,\u201d she wrote in a report and quoted by BT.
\nDr Chua and Lee expect to see an uptick in wages in the coming year, citing structural changes like tighter supply of foreign labour as well as the expansion of Progressive Wage Model salary floors for the retail and food and beverage sectors.
\nThe MAS and MTI still maintained their full-year forecast, with core inflation averaging 0% to 1% this year and headline inflation dropping between 0.5% and 1.5%.
\nThey also reiterated that core inflation is expected to \u201ccontinue to gradually increase\u201d, while all-items inflation will likely ease in the second half of this year.
\n\u00a0
\nLooking for a property in Singapore? Visit PropertyGuru\u2019s\u00a0Listings,\u00a0Project Reviews\u00a0and\u00a0Guides.
\nVictor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email:\u00a0victorkang@propertyguru.com.sg
\n
\nSource : proppertyguru.com.sg\/Property Market
\nRead more…Analysts believe hike in inflation still at manageable level<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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