Sell-Side Updates Post Yesterday's CPI, Core Inflation Still Expected To Ease

Singapore CPI printed firmer than expected yesterday, although US banks expect a continued moderation in core inflation into 2024 (albeit with upside risks), see below for more details.

• J.P. Morgan: "In the details, goods inflation has led the slowing in core CPI though the decline in core services prices remains a touch stickier. Food services inflation continued on its downtrend. Within core services prices, travel-related prices have remained elevated – and a source of the October rise together with courier and postal services – but should slow during 4Q23 as both the supply side adjusts and demand normalizes. Nonetheless, notwithstanding the El Niño effect later this year and the lagged impact of rentals and 1%pt GST hike on January 1, 2024, the trend easing in core CPI should remain in place."
  
• Goldman Sachs: "Going forward, despite the higher inflation print today, we expect core inflation to continue on an easing path over the coming year. The risk to inflation remains skewed to the upside given still tight labor markets and potential commodity price shocks. Our baseline is that MAS will keep its monetary policy parameters unchanged until end-2024. However, the risks are skewed in a hawkish direction should core inflation prove to be stickier than we currently expect."