Chart of the day: Is the inflation picture finally bottoming?

Core inflation accelerated to +1.1% in June.

Singapore’s inflation picture may soon see an upward trend, as recent figures by the Monetary Authority of Singapore’s (MAS) leads analysts to believe that the inflation picture has likely bottomed.

According to a report by OCBC, core inflation accelerated from +1% YoY in May to +1.1% YoY in June. This is the highest spike since February 2015, as services inflation remain predominant. In addition, 1H16 saw headline and core inflation running at -0.9% YoY and +0.7% YoY respectively.

OCBC notes that MAS maintains 2016 core inflation to still average around 1%, and headline inflation at -1% to 0%. Further, MAS also tips core inflation to trend towards its historical average of close to 2% over the course of 2017.

OCBC asserts, however, that headline inflation may take a few years to converge back to its historical average.