Singapore: Inflation forecast to pick up pace in 2021 – UOB

Barnabas Gan, Economist at UOB Group, reviews the latest inflation figures in Singapore and the prospect for the current year.

Key Quotes

“Singapore’s consumer price index rose for the third month at +0.7% y/y (+0.6% m/m nsa) in February 2021. The rate of increase in inflation was faster than market estimate of +0.6% y/y (+0.4% m/m nsa). Importantly, core inflation rose for the first time since January 2020 at +0.2% y/y.”

“The balance of risk for inflation in 2021 is tilted to the upside on the back of the reflation environment – defined as the return to global economic growth after the COVID-19-induced recession in 2020. This is coupled with higher oil prices, where we forecast Brent to average US$70 per barrel in 4Q21, up from US$51.80 per barrel in 4Q20.”

“On the back of the faster-than-expected increase in inflation, we upgrade our outlook for both headline and core inflation to average 1.0% in 2021, up from a previous estimate of 0.5%.”