Price rises are likely coming under control in Singapore, but geopolitical risks could upend the situation, says UOB economist Alvin Liew.
File photo. The good news is that significant progress has been made in the fight against inflation. The bad news is that it is still too early to declare victory. SINGAPORE: You may not be able to feel it yet, but the pressure on your wallet should start easing in the coming months. Your lunchtime chicken rice will still be getting costlier - but at a slower rate. And if you are lucky, the cost of a new shirt for your year-end festivities may even fall.
These positive signs suggest that Singapore’s central bank is succeeding in curbing price pressures, with its carefully-tailored strengthening of the Singdollar’s exchange rate these past few years.When examining the components of Consumer Price Index at a more granular level, one would observe that price pressures are easing for the majority of goods and services, while sharper price increases mostly come from three categories.
As for healthcare, the costs are facing structural upward pressures. The demand for healthcare will keep on increasing with Singapore’s ageing population while there are supply constraints on the healthcare workforce including doctors and nurses. In Singapore, MAS does not publish an explicit inflation target. However, it has said that a core inflation rate of just under 2 per cent is consistent with overall price stability in the economy.
Nobody has a crystal ball on how the global situation will play out. Nonetheless, it is easy to see how any intensification of geopolitical tensions in the Middle East or a re-escalation of the Russian-Ukraine war could drive shipping rates and energy and commodities costs upward.
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