3 inflation risks every Singaporean should watch out for

Find out why analysts are getting more worried over Singapore's inflation.

Here's more from Bank of America Merrill Lynch:

We have turned more uncomfortable because of several reasons, despite MAS core inflation easing to +2.2% in August (from +2.4% in July).

[1] The month-on-month CPI increase in August was +0.6%, the highest since March 2012. All major items moreover showed a positive month-on-month price increases, led by transport (+2%), clothing/footwear (+1.4%), education (+0.5%) and housing (+0.4%). The last such episode for across-the-board m-o-m price increases was in Nov 2011.

[2] The MAS & MTI press release highlighted in the outlook that inflation will rise in September, “due to the surge in COE premiums in August as well as the base effects associated with the disbursement of government rebates.” We find it a bit more difficult to accept that the MAS will ease when the next inflation reading will turn higher (probably to about 4.2% or above).

[3] Our projections show that full year average inflation is more likely to come in around 4.5% as a result (given the surprises in August and uptick in September), which is the upper end of the MAS 4% - 4.5% forecast. There is a far higher chance of inflation breaching 4.5% than 4%.

MAS may wait for definite signs that inflation is contained
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MAS may wait for more definite signs that inflation is contained. Domestic rather than imported inflation remain the main drivers, with accommodation and private road transport costs accounting for about 60% of CPI inflation in August.