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Singapore Core Inflation Reaches 3.3% in December 2023. Singapore’s core inflation increased unexpectedly in December last year. However, the Lion Country maintains its projections for this year, giving a sign that inflation can still be managed.

The Singapore Department of Statistics on Tuesday (23/1/2024) reported that core inflation excluding housing and private transportation costs increased to 3.3% in December 2023 (year-on-year/yoy).

Meanwhile, Singapore’s headline inflation figure reached 3.7% in December 2023, higher than the median estimate of 3.5% and compared with 3.6% in November 2023.

This inflation exceeded analyst projections in a Bloomberg survey, with median estimates of 3% and 3.2% in November 2023, and was also higher than the Ministry of Trade and Industry (MTI) forecast for December 2023, with core inflation in the upper 2,000 range. 5%-3% at the end of the year.

Then, although both emphasized that core inflation will face some volatility until early 2024 due to rising electricity and gas prices and increases in goods and services taxes, according to him, during the remainder of this year inflation will continue its gradually moderate trend due to decreasing pressure on import costs and easing in the power market domestic work.

In addition, the central bank and MTI maintain their core inflation projections in 2024 at an average of 2.5%-3.5%. If we set aside the temporary impact of the increase in goods and services tax (GST), it is estimated that this indicator will be in the lower range, namely 1.5%-2.5%.

The MAS, which uses the exchange rate as its main tool, kept its policy stance unchanged at two reviews last year, after tightening five times between October 2021 and 2022. This year, the MAS will begin quarterly reviews of monetary policy.

Although keeping the Singapore dollar’s nominal effective exchange rate on an appreciation path has helped offset imported inflation, the central bank still needs to balance the goal of price stability with economic growth.

Singapore’s economy avoided recession last year and grew faster than expected at 1.2%. This year’s forecast range for the broader measure, which is currently set at 3%-4%, will be updated in the MAS monetary policy statement in January 2024.

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