Recession worries in Singapore have been reduced after a new study showed that the city-state's inflation decelerated to some extent in October as the cost of housing rose at a slower pace.
According to a Reuters news agency poll, inflation in the country “probably slowed slightly in October,” which has caused analysts and government officials to be positive that the city-state will escape a recession that has been troubling the economy in recent months.
However, the study warns that rising prices will remain a primary task for policymakers as the country's economy continues to head to a slowdown.
Singapore's consumer price index (CPI) rose by 4.6% in October from a year ago, marginally below September's 4.7% pace but considerably above past levels of 2-3%, according to the median forecast of 12 economists.
Core inflation –which excludes the cost of cars and housing as they are more influenced by government policy- possibly edged down to 2.3 per cent year-on-year from September's 2.4 per cent. The Monetary Authority of Singapore (MAS) carefully examines the core figure when settling policy.
“Headline inflation probably eased to 3.6 per cent in August, helped in part by a high base last year for transport and housing,” Bank of America Merrill Lynch said in a note to clients. “The lower inflation reading will likely give the MAS room to ease policy at the October meeting.”
Over the past two years, Singapore has been suffering from greater inflation than usual mainly due to a spike in housing rents and car prices amidst a slow economy. Additionally, the manufacturing sector had already suffered a slowdown in production and exports over the past few months, which accentuated worries that Singapore was facing a recession.
Measures to make it harder for firms to hire low-cost workers from abroad have led to a tight job market which has also fostered inflation by pushing up the cost of services such as healthcare and cleaning services.
Prime Minister Lee Hsien Loong said that he is confident the city-state will avoid being the first major Asian economy to fall into recession this year as there are positive job numbers in the city.