Singapore inflation could rise to 3% next year

Despite slowing to 1.6% this September.

Government data showed that inflation rate slowed in Sept 2013 to +1.6% YoY (Aug 2013: +2.0% YoY). Core inflation rate (CPI ex-accommodation and private road transport) also moderated to +1.7% YoY (Aug 2013: +1.8% YoY).

Inflation averaged +2.5% YoY in Jan-Sep 2013 and the year-to-date inflation rate has been steadily falling from the high of 4.2% in Jan-Feb 2013, leading Maybank Kim Eng to keep its full-year estimate of +2.5% or at the lower end of the government forecast range of 2.5%-3.0%.

But upside risks remain, the research firm warned, "especially from the tight labour market arising from the higher costs and tighter conditions for the hiring of foreign workers that could translate into higher domestic prices through higher business operating costs."

"We expect inflation rate of 3.0% next year," Maybank added.