Singapore’s core inflation to stay above 3% for the rest of the year: Nomura

Core inflation rose 3.1% in May.

Core inflation will likely stay above 3% over the remainder of 2024 in view of a stronger economic rebound and high labour costs, according to Nomura.

In a recent report, Nomura expects inflation to remain sticky for the rest of the year and maintained its core inflation outlook for this year at 3.3%. 

“This reflects our view of a stronger economic recovery, which should lead to a more significant pass-through from higher labour costs in addition to the GST hike earlier this year.

The estimate is at the higher end of the 2.5% to 3.5% official forecast range by the Monetary Authority of Singapore (MAS). Core inflation rose 3.1% in May to mark the third straight month of sustained growth.

Nomura penciled a gross domestic product (GDP) growth forecast of 3% YoY this year, faster than the actual 1.9% expansion last year.

The bright economic outlook is supported by the global tech turnaround, which is expected to lift Singapore’s manufacturing output, as well as the services sector benefiting from robust tourism. 

Nomura expects the uptick in these industries to help offset the anticipated weakness in pharmaceuticals production, mainly caused by the slowing demand for vaccines in a post pandemic era.