Asked about their outlook, economists noted that the factors that have fueled inflation in recent months are unlikely to go away any time soon. These include soaring global energy and food prices, as well as a tight labor market and improving domestic demand.
In fact, inflation data in June will have to contend with an additional factor – Malaysia’s chicken export ban which came into effect earlier this month and has led some Singapore companies to raise prices. said Song Seng Wun, an economist at CIMB Private Bank.
That said, favorable base effects in the second half of the year could mean that year-on-year inflation figures could start to move away from their peaks, but “not too much” as the confluence of inflationary pressures persists, he added.
Barclays regional economist Brian Tan also expects Singapore’s consumer price indices to recover further before ‘stabilizing’ through July and August, largely due to base effects from a year ago.
“Inflation was still quite subdued in the first half of 2021, as inflationary pressures built up at the start of the year, we saw the numbers creep up so quickly,” he told TSWT during a briefing. telephone interview.
“But in the second half of last year, when measures were eased to reopen the economy, inflation picked up, which will create a small balancing effect from the high inflation that we currently know.”
Maybank economists Chua Hak Bin and Lee Ju Ye believe core inflation is likely to peak in the third quarter as commodity prices have fallen from recent highs.
Recent moves by some countries to ease their export bans on products such as palm oil and fertilizers will help ease pressures on food prices. Slowing global growth and monetary tightening are also combining to slow demand and cool commodity prices, they wrote in a note.
Still, economists raised their inflation forecasts for the year as a whole to account for stronger-than-expected price pressures, particularly in energy and food, as well as certificate premiums. rights (COE) and high rental costs.
Singapore’s tight labor market is also likely to stoke a “wage-price spiral”, which occurs when workers demand higher wages to keep up with inflation, prompting companies to raise prices to cover their costs.
Maybank now expects core inflation to stand at 3.2% for 2022, down from an earlier estimate of 3%, and headline inflation at 5.1%, down from 4.8% previously. .
Also raising his projections by 0.5 percentage points each, UOB senior economist Alvin Liew expects headline inflation at 5% and core inflation at 4%.
“This is in line with the official outlook for headline CPI but above the official range for core inflation forecasts, and risks are tilted to the upside,” he wrote.