Core inflation to rise to 1.4% in 2022: analysts

This is on the back of higher energy and food prices.

Core inflation is expected to increase to 1.4% in 2022, according to a report released by Maybank Kim Eng. 

This is a 0.4% increase from the 1% recorded in 2021. 

Headline inflation is also expected to settle at 1.5% in the next year, down from 1.8% in 2021. 

Multiple factors were mentioned by Maybank analysts, Chua Hak Bin and Lee Ju Ye, as the reasons for the elevation of costs. 

“Persistent supply chain disruptions will keep energy, food, and freight costs elevated in 2022. Accommodation costs will continue rising with the expected recovery in foreign employment and delays in HDB completions.”

Wage costs are also expected to rise at a faster pace in 2022. This is due to stricter foreign worker policies and the development of the Progressive Wage Model in the retail sector. Along with a new minimum local qualifying salary of $1,400, this will take effect by September 2022.

Around 13,000 workers will be added with the expansion to the retail sector, with the change in qualifying salary affecting around 79,000 workers.

The Monetary Authority of Singapore, on the other hand, is seen to likely raise its core inflation forecast to 0.5% to 1.5% for the next year, up from 0% to 1% in 2021.