July 23, 2019 / 5:05 AM / a month ago

Singapore core inflation hits over two-yr low, raising bets on policy easing

SINGAPORE (Reuters) - Singapore’s June core inflation measure hit a more than two-year low as electricity and gas prices declined, firming bets among economists that its central bank will ease monetary policy in October.

FILE PHOTO: People shop at a pop-up store in Singapore April 24, 2017. REUTERS/Edgar Su/File Photo

Official data showed on Tuesday that Singapore’s core inflation gauge in June rose 1.2% from a year earlier, as expected by a Reuters poll. This was the lowest print since March 2017 when core inflation rate grew at the same pace.

“The risk of a monetary easing has definitely risen,” said Edward Lee, an economist at Standard Chartered.

“But this is not unexpected. We do expect a bottoming during this time.”

Core inflation is the Monetary Authority of Singapore’s (MAS) preferred price gauge in setting monetary policy.

The central bank’s core inflation measure excludes changes in the prices of cars and accommodation, which are influenced more by government policies.

All-items consumer price index came in lower than expected as prices of services and retail inflation slowed.

Singapore’s headline inflation rose 0.6% in June from a year earlier, lower than May’s 0.9% rise.

The median forecast in a Reuters poll was for all-items CPI to rise 0.7%.

Singapore’s economy grew at its slowest annual pace in a decade in the second quarter, preliminary data showed on July 12, raising bets that a technical recession and monetary policy easing could be just around the corner.

In a Reuters poll done after the release of the second-quarter data, seven of 11 economists said they expected the MAS to loosen its exchange-rate monetary policy in its next policy statement, due in October, with the other four forecasting no change.

Since then, two additional economists have called for a monetary easing amid a dim economic outlook.

Reporting by Fathin Ungku; editing by Gopakumar Warrier

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