Singapore’s central bank said consumer price declines aren’t persistent or pervasive, even as the country’s headline inflation is likely to be negative for the rest of the year.
The Monetary Authority of Singapore maintained its prediction of a 0.5 percent drop to 0.5 percent gain in consumer prices this year, Managing Director Ravi Menon said on Tuesday after the release of the central bank’s annual report. It also kept its core inflation forecast.
While global and regional economic recoveries remain broadly intact, the nation’s growth will probably be moderate and uneven amid China’s slowdown and firm business costs, the MAS said in its report. Consumer prices fell for a seventh straight month in May, even as the central bank unexpectedly eased monetary policy in January.
“Looking ahead, external sources of inflation should be generally benign, given ample supply buffers for major commodities,” the MAS said in its report. “Domestic cost pass-through could be tempered by the moderate growth environment, while budgetary measures will reduce prices for some consumption items.”
Consumer prices should pick up in 2016, with the core inflation rate rising gradually from the fourth quarter, Menon said. The central bank is “very comfortable” with its current policy stance and the next decision will be in October as scheduled, he said.
The central bank and the trade ministry are reviewing their growth forecast for 2015, taking into account a weaker first half, the MAS said. It is too premature to remove any cooling measures in the property market, Menon said.
The central bank posted a net profit of S$281 million ($205 million) in the year ended March 31, compared with a gain of S$15.8 billion a year earlier, it said. The smaller gains were due to a “negative translation effect” as the euro and yen depreciated against the Singapore dollar, it said.