CPI Detail Firmer Than Headline Miss Suggests

The headline CPI came in noticeably weaker than expected, +6.6% y/y, versus +7.1% forecast. The Jan outcome was also only a modest step up from the 6.5% Dec pace. M/M the rise was 0.2% the same as Dec, which is a soft result given the GST hike. Still, core printed at 5.5% y/y, which was less of a downside miss (5.7% forecast).

• This measure also showed a pick up from the prior month (5.1%). Also, the m/m core number rose by 0.82%, the strongest for this cycle. The m/m sequence has been picking up since the Oct 0.10% outcome last year.
• The biggest downside surprise was in recreation and culture relative to recent trends (-1.6% m/m for Jan, +1.8% in Dec). Most other sub-categories recorded firmer m/m momentum.
• This result may not be enough to tip the MAS to further tightening in April, but the result was not as weak as the headline implied.
• The chart below overlays SGD NEER Y/Y against headline and core Y/Y outcomes.
• USD/SGD is higher post the result, up from 1.3380 level to 1.3400, although the USD is firmer, so that has likely played a role.
• The NEER (per Goldman Sachs estimates) has also edged lower, albeit at the margins. Now back to -0.60% from the top end of the band, we were closer to -0.50% earlier.

Fig 1: SGD NEER Y/Y Versus CPI (Headline & Core Y/Y)

Source: MNI - Market News/Bloomberg