One of Singapore’s longest deflationary periods on record likely to end in 2016: analysts

Last year’s low base will help.

Inflation will remain subdued in 2016 but will likely creep back into positive territory before the year is out, according to analysts from OCBC.

Among the factors which will keep inflation muted is the continued correction in residential property prices, coupled with lower private road transport costs. Another factor is that the pass-through from the tight labour market into the broader cost environment has been fairly limited.

“Given the benign crude oil price environment, the CPI basket components that would contribute positively to inflation are likely to be food (due to La Nina), healthcare and education costs. At this juncture, we do not see any game-changers that warrant a third monetary policy easing this year as the 4Q15 flash GDP growth estimate is “water under the bridge” so to speak,” OCBC said.