Inflation momentum to ease further into 2023: analysts

RHB expects core inflation to decline 0.1% to 0.2% MoM in Q423.

Experts expect inflation momentum to ease further into 2023, following the decline of both headline and core inflation in May.

The Monetary Authority of Singapore (MAS) also expects core inflation to "moderate further in H2 2023."

Based on RHB's estimates, headline and core inflation will likely be at 4.0% YoY, whilst UOB predicts the former to average 5.0% and the latter to average 4.0% in 2023.

Excluding the 2023 GST impact, however, UOB Kay Hian expects headline inflation to average 4.0% and core inflation to average 3.0% in 2023.

"If the stickiness of core price increases persists for the next two months, then we may need to revise our core CPI forecast higher." UOB Kay Hian added.

RHB, for its part, said "potential sticky inflation pressures in the near-term, led by potentially higher agricultural prices on the back of an El Nino weather condition in 3Q23," may affect inflation figures.

"Beyond the El Nino conditions and easing demand-pull inflation, other domestically-induced factors could pressure inflation lower. These include the increase in the Certificate of Entitlement (COE) quotas and the increase in housing unit supply, which consequently should moderate rental, accommodation, and private transport costs in the year ahead," RHB said.

"A potentially softening labour demand, based on the understanding that labour data is a lagged indicator against the current slowing macroeconomic environment, may also cap inflation pressures in 2H23," RHB added.