OUTLOOK
MAS and MTI said global energy prices have been relatively have been relatively stable in recent weeks, remaining below the levels a year ago on average.
Meanwhile, the prices of Singapore’s imported manufactured goods have also continued to be on a broad decline, in tandem with the easing of global inflation and the gradually strengthening trade-weighted Singapore dollar exchange rate.
On the domestic front, unit labour costs are projected to rise more gradually alongside moderating nominal wage growth and improving productivity.
“Correspondingly, services inflation, which has been on an easing trend, should slow further over the rest of 2024,” said MAS and MTI.
Core inflation is expected to remain below 2 per cent (including the one-off effects of the GST) through to end-2024.
It is projected to average 2.5 to 3.0 per cent in 2024 as a whole, before stepping down further to 1.5 to 2.5 per cent in 2025.
Overall inflation is also expected to come in at around 2.5 per cent for the whole of 2024 and average 1.5 to 2.5 per cent in 2025.
“An anticipated pickup in private transport inflation amid the firm demand for cars should be more than offset by lower accommodation and core inflation next year,” MAS and MTI said.
The authorities added that risks to the inflation outlook for 2025 are relatively balanced. Domestically, stronger-than-expected labour market conditions could lead to a slower easing in labour unit cost growth.
“An intensification of geopolitical tensions may lead to higher commodity prices and add to imported costs,” said MAS and MTI.
“Conversely, a significant downturn in the global economy could induce a greater easing of cost and price pressures, causing domestic inflation to come in lower than expected.”
