Singaporean headline inflation likely to have accelerated in September

Singaporean inflation data is set to be released this week. The headline consumer price index is expected to have risen to 0.9 percent year-on-year in September from 0.7 percent seen in August, noted DBS Bank in a research report. Price of oil surged in the month of September and surpassed the USD 80/bbl level. This might possibly be seen in fuel and utilities related costs.

Nevertheless, weightage for these items are overshadowed by the bias on the COE premiums, which has continued to stay weak because of the excess supply of vehicles in the secondary market. Though near-term trend for inflation continues to be on the upside, the rise might be gradual, tampered by the COE premiums and sluggish residential rental.

However, core inflation, which excludes imputed rental and private transport costs, are hanging slightly below the historical average mark of 2 percent and might possibly rise above that within the coming months, stated DBS Bank. This is definitely one of the main factors prompting the MAS to further normalize monetary policy recently.