Singapore Oct core inflation at 2.1% y/y, lowest in almost 3 years

Singapore’s key consumer price gauge rose 2.1 per cent in October from a year earlier, lower than economists’ forecasts and the smallest rise in almost three years, official data showed on Monday.

The core inflation rate, which excludes private road transport and accommodation costs, compared with a forecast of 2.5 per cent in a Reuters poll of economists and September’s rate of 2.8 per cent.

Core inflation in October was the lowest since December 2021 when it was also 2.1 per cent. Authorities pegged the drop to moderation in services, electricity and gas, and retail and other goods inflation.

Headline inflation was 1.4 per cent in annual terms in October, lower than forecast of 1.8 per cent in the poll.

Last week, Singapore upgraded its 2024 economic growth forecast to around 3.5 per cent from a previous range of 2.0 per cent to 3.0 per cent after third-quarter growth came in stronger than expected.

The core inflation figure coming close to the central bank’s guidance of 2 per cent by year-end leaves room for monetary policy easing at its next meeting in January, Maybank economist Chua Hak Bin said.

Chua expects the central bank to slow the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER), through which it manages monetary policy.

The MAS left its policy settings unchanged at a review last month as inflation pressures continued to moderate and growth prospects improved.

On Monday, the central bank and trade ministry said core inflation was expected to remain around 2 per cent into year-end and step down further to 1.5 per cent to 2.5 per cent in 2025.

Meanwhile Singapore’s key consumer price gauge rose 2.8 per cent in September from a year earlier, higher than economists’ forecasts, official data showed.

The core inflation rate, which excludes private road transport and accommodation costs, compared with a 2.7 per cent forecast in a Reuters poll of economists and the 2.7 per cent rate in August.

Meanwhile Port authorities in Singapore and Rotterdam said they have not received reports of vessels experiencing problems related to the use of cashew nutshell liquid biofuel - an issue highlighted by fuel testing agency CTI-Maritec last week.

Several ships using the two ports reported operational problems in recent months after using marine fuel blended with cashew nutshell liquid, the Singapore-based agency said on Thursday, adding that the cashew nutshell liquid had come from undeclared source materials or production processes.

The operational problems included fuel sludging, injector failure, filter clogging, system deposits and corrosion of turbocharger nozzle rings.

CTI-Maritec did not name the vessels or shipping lines involved, and it was not clear how many ships were affected.

The Maritime and Port Authority of Singapore said on Monday that it would investigate any reports received. Rotterdam port authorities said late on Friday that they had not received reports of such problems.

There is no marine fuel specification available for cashew nutshell liquid from any authorised body, CTI-Maritec said.

CTI-Maritec advised ship-owners not to use 100 per cent cashew nutshell liquid as a marine fuel or as a blending component, or unestablished bio-products in marine diesel engines.

It said their use would contravene guidance from the International Maritime Organisation on the supply of fuel oil to ships.

Cashew nutshell liquid is a non-FAME (fatty acid methyl ester) biofuel, which is a byproduct of the cashew nut industry. While it has been touted as an alternative renewable fuel, it is highly corrosive.

Ship-owners have been exploring various marine biofuel blends as an alternative to dirtier bunker fuels in order to cut emissions.

Singapore shares jumped to a 17-year high last Tuesday, powered by a rally in index heavyweight financials, as the city-state ramps up efforts to revive its stock market.

The Straits Times Index, comprising 30 biggest companies in the city-state, rose as much as 0.9 per cent to touch a level unseen since November 2007. It has gained 16 per cent so far this year, outperforming most of its rivals in the region.

In August, the Monetary Authority of Singapore (MAS) said it had formed a review group to recommend steps to strengthen the development of the equities market in the island country, which hosts more than $4 trillion of assets under management.

“The combination of seemingly stronger political will and low market expectations drives our conviction that soon-to-be announced initiatives will likely have a meaningfully positive market impact, even if their exact details are still to be fleshed out,” Morgan Stanley analysts said in a note. DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank rose between 0.4 per cent and 0.6 per cent.

Agencies