Rising fuel prices to heighten inflation

While the MAS is right that the bulk of the inflationary pressure previously came from high COE prices and accommodation costs, food and fuel prices will become more prominent factors in the inflation equation.

According to DBS, that should prompt further monetary action from the MAS.

The political crisis in the Middle-east and North Africa has led to the recent spiked in global prices. Specifically, crude Brent rose from USD 99.8/bbl to USD 112/bbl in February and that should feed into even higher transport costs apart from the high COE prices.

Inflation still tops the list of concerns for central bankers and should remain the focus of monetary policy. With that, a one-off upward re-centering of the Sing NEER appears to be on the cards in April.