24 January 2017

ECONOMICS

In this report:
Singapore Inflation on an upward trend

KINDLY REFER TO THE LAST PAGE OF THIS PUBLICATION FOR

IMPORTANT DISCLOSURES
 AmBank Research
Tuesday, 24 January 2017
Anthony Dass
Chief Economist/Head
anthony-dass@ambankgroup.com
03-20322972
Naomi Margaret Kasimir
Research Executive
naomi-kasimir@ambankgroup.com
03-20361687

Singapore
Inflation on an upward trend
Headline inflation in December rose to its fastest rate since September 2014 to 0.2%y/y from a flat growth in
November. On m/m basis, inflation registered a slower rise of 0.2% from 0.3% in November. For the full year,
inflation contracted by -0.5% for the second consecutive year.

We can expect upward inflationary pressure to continue in 2017, coming from higher oil prices, expiry of road tax
rebate for petrol vehicles as well as the costlier car park fees. Dissipation of disinflationary effects from budgetary
measure will also fade going forward. Uncertainty on the global front and potential trade protectionism have been
fuelling inflation expectations. This would potentially increase consumer demand in the present. The soft labour
market will put a lid on wage growth where this would contain faster inflation.

Fastest inflation rate since September 2014

Headline inflation in December rose to its fastest rate since September 2014 to 0.2%y/y from a flat growth in November. On
m/m basis, inflation registered a slower rise of 0.2% from 0.3% in November. For the full year, inflation contracted by -0.5%
for the second consecutive year.

Core-inflation, which excludes costs of accommodation and private road transport, eased to 1.2%y/y from 1.3%y/y in
November due to the decline in retail goods inflation which had managed to offset the acceleration in services inflation. In
2016, core-inflation registered a growth of 0.9% compared to 0.5% in 2015.

Faster inflation in December was led by the higher private transport costs of 1.7%y/y compared to 0.2%y/y in November due
to higher car park fees effective 1st December 2016 and hike in petrol prices.

Prices of services rose to 1.6%y/y from 1.5%y/y in November due to higher increase in holiday expenses.

Meanwhile, accommodation cost fell -3.8%y/y reflecting the soft housing rental market.

Onwards and upwards

We can expect upward inflationary pressure to continue in 2017, coming from higher oil prices, expiry of road tax rebate for
petrol vehicles as well as the costlier car park fees. Dissipation of disinflationary effects from budgetary measure will also
fade going forward.

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 AmBank Research
Tuesday, 24 January 2017

Uncertainty on the global front and potential trade protectionism has been fuelling inflation expectations. This would
potentially increase consumer demand in the present. The soft labour market will put a lid on wage growth where this would
contain faster inflation.

Table 1: Key Inflation Data

Dec'15 Jan16 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CPI y/y -0.6 -0.6 -0.8 -1.0 -0.5 -1.6 -0.7 -0.7 -0.3 -0.2 -0.1 0.0 0.2
CPI m/m 0.0 -0.2 -0.1 0.0 -0.1 -0.7 0.7 -0.3 0.5 0.0 -0.3 0.3 0.2
Core-CPI y/y 0.3 0.4 0.5 0.6 0.8 1.0 1.1 1.0 1.0 0.9 1.1 1.3 1.2
Food 1.5 1.7 2.0 2.2 2.3 2.2 2.1 2.1 2.0 2.2 1.9 2.0 2.0
Housing/Utilities -4.2 -4.0 -4.1 -4.2 -1.9 -6.4 -4.2 -4.3 -4.3 -4.3 -3.8 -3.7 -3.8
Transport -0.9 -1.5 -2.9 -4.3 -5.4 -5.7 -4.3 -3.5 -0.7 -0.5 -0.2 -0.3 0.8
S$/US$ Avg 1.4 1.4 1.4 1.4 1.3 1.4 1.4 1.4 1.3 1.4 1.4 1.4 1.4
S$/US$ y/y 7.1 7.1 3.7 -0.3 0.1 2.6 0.6 -0.8 -3.6 -3.9 -1.1 -0.3 2.0
Source: CEIC Data/AmBank Group

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 AmBank Research
Tuesday, 24 January 2017

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