3 drivers likely to push price pressures higher in Q4

Experts said core inflation will stay above 2.5%.

Economists expect price momentum in Singapore to accelerate by the last quarter of the year following the 0.7% MoM uptick in headline CPI and core inflation expansion to 2.7% YoY.

According to RHB economists, three factors will drive the further acceleration in Singapore's price pressures.

The first catalyst is the demand-pull perspective, citing Singapore's "relatively robust GDP growth in H2 2024."

RHB added that electronics and pharmaceutical exports are well-positioned to recover for the rest of this year.

The second catalyst is domestic drivers surrounding higher unit labour costs.

"Notwithstanding the slowing YoY growth in unit labour cost in Singapore, we believe that businesses will continue to pass earlier increases in labour costs to consumer prices," an RHB economist said.

"The upside bias may come from stronger-than-expected labour market conditions which translate into a re-acceleration in wage growth," they added.

Lastly, RHB said higher global commodity and food prices could still elevate the overall inflationary climate in Singapore.

"Several factors could elevate commodity prices, specifically stronger demand conditions as lower global interest rates inject positive spillover effects into manufacturing activities," RHB said.

"Black swan events such as intensified geopolitical tensions, and/or unexpected oil supply cuts by oil-producing economies, may also lift energy prices," they added.

With these three catalysts, RHB expects Singapore's imported inflation will increase steadily in the second half of 2024. It expects core CPI to stay above 2.5%.