Sell-Side On Singapore Inflation

Below outlines some sell-side views post yesterday's Singapore inflation print. Bottom line is a number of firms don't expect MAS policy change this year.

• J.P. Morgan: "The 1%pt rise in the GST had been expected to materially lift core CPI (J.P. Morgan: 1.2%m/m, sa) given expectations that the GST hike would allow for a catchup in consumer prices to input costs. The January core CPI outcome is thus a positive surprise and suggests that the inflation process has not materially changed. Expecting MAS to remain on hold - Subsequently, although core CPI is likely to remain elevated through 1H23 in over-year-ago terms , this rise reflects a one-off rise in the price level rather than a change in the inflation process per se."
• Goldman Sachs: "Going forward, while core services inflation could remain sticky at an elevated level in 2023, we expect lower utilities and goods inflation to push MAS core inflation lower from here as growth slows and cost-push pressure eases. The January inflation print suggests downside risks to our current 2023 inflation forecast trajectory. As growth slows and inflation pressures ease, we continue to forecast that MAS will keep policy settings on hold this year"
• ING: "The market consensus had pointed to headline inflation surging to 7.1% YoY and core inflation rising to 5.7% but both the actual headline and core measures settled below expectations. Despite the downside surprise, price pressures remain evident, especially on the demand side, as inflation for recreation & culture stayed high at 6.7%. With today’s report, we believe that the Monetary Authority of Singapore will retain its hawkish stance while monitoring price developments ahead of its April meeting. We will be getting one more inflation report before the April meeting and this should be pivotal in determining whether the MAS will need to tighten its policy stance further or wait to see the impact of its cumulative tightening measures carried out since late 2021."