Chart of the Day: Singapore’s CPI to drop even further in 2015

Amid weaker oil prices and lower property prices.

Domestic cost pressures have continued to build up as a result of tight labour supply and strong demand for workers. Indeed, the seasonally adjusted overall and resident unemployment rates were low at 2.0% and 2.8% respectively in 1H14, according to a report by OCBC Investment Research.

DBS adds that this has led to sustained wage pressures and continued pass through of costs to consumer prices. However, this pass through has been uneven across sectors, and along with easing property prices and cost of private road transport, the CPI-All items inflation rate has dipped below the core inflation rate.

Looking ahead, though the CPI-All-items inflation rate may drop even further with weaker oil prices and lower property prices, core inflation is expected to remain firm at 2-3% in 2015.