The country’s core inflation contracted for another consecutive month in August, with authorities expecting economic challenges and a weak labor market to continue to dampen consumer demand.
Core inflation, a main consideration for Singapore’s central bank, fell -0.3 per cent in August in comparison with the same period last year, said the Monetary Authority of Singapore and Ministry of Trade and Industry said in a joint news release on Wednesday.
Singapore’s core inflation had fallen -0.4 per cent in July.
The pace of decline had moderated mainly due to a smaller decline in the cost of services, retail and other goods, as well as electricity and gas, said MAS and MTI.
The headline consumer price index (CPI) or overall inflation remained unchanged at -0.4 per cent year-on-year in August after a sharper fall in private transport costs was offset by a more moderate decline in the core CPI components.
MAS and MTI said inflation is expected to remain subdued overall, and their forecast of MAS Core Inflation and CPI‐All Items inflation averaging between -1 per cent and 0 per cent this year.
Let’s remember that Singapore suffered a big economic downturn in the Q2 of the year that led to a recession, this as consequence of the crisis for Covid-19 pandemic.
The services and construction sector were the most affected by this economic downturn, the construction sector was practically paralyzed with a 95% drop in the last quarter
The Singapore government forecasts that the GDP will shrink between 4 and 7% in annual terms, which would be considered the worst decline in its history.
The Ministry of Trade attributed the contraction to “low external demand in the context of a downturn in the global economy.”
Although the city-state is slowly going back to its usual activities (opening restaurants, allowing some flights, etc.) it will take some time for things go back to how they were, if they ever go back.