SINGAPORE (Reuters) - Singapore’s core inflation likely eased to its slowest pace in nearly three years in July, reinforcing expectations that the central bank will loosen policy later this year to support the city-state’s subdued economy.
A Reuters poll of 11 economists forecast core inflation of 1.0% in July from a year earlier, versus 1.2% in June. That would mark the gauge’s smallest rate of increase since September 2016.
Core inflation is the Monetary Authority of Singapore’s preferred price gauge for setting monetary policy. It excludes changes in the price of cars and accommodation, which are influenced more by government policies.
Singapore’s headline consumer price index in July likely rose 0.55%, the median of 12 forecasts showed, compared with 0.6% a month earlier.
Singapore has been posting a slew of muted economic growth data. Last week, it slashed its full-year economic growth forecast as global conditions were seen worsening and data confirmed the slowest growth rate in a decade, amid mounting fears of recession in the city-state.
“We think that in October they are going to ease to a neutral bias or zero appreciation of the Sing NEER (Singapore Dollar Nominal Effective Exchange Rate) given the slowing core inflation as well as the GDP growth number,” said Lee Ju Ye, an economist with Maybank Kim Eng.
Reporting by Aradhana Aravindan,; Additional reporting by John Geddie; Editing by Rashmi Aich