Chart of the Day: Why Singapore's inflation eased for the 'wrong reasons'

And MAS finds this unsettling.

According to J.P. Morgan, since hitting a 2013 high of 4.9%oya in February, CPI inflation slowed to 1.9% as of July.

Core inflation eased as well, albeit more gradually, to 1.6% from 1.9% in July.

Here's more from J.P. Morgan:

This year, we forecast CPI and core inflation to average 2.6% and 1.7%, respectively, well below their 2012 averages of 4.6% and 2.5%.

Nevertheless, the MAS is not taking comfort in the lower CPI inflation rate, for a few reasons. First, accommodation and transport (which includes COEs), which monetary policy has little effect on, have accounted for 2.7%-pts of the 3.0%-pt decline in CPI inflation since February.

Core inflation, which excludes most of those categories, has slowed only 0.3%-pt over the same period.

Second, while inflation rates are not likely to print anywhere near their 2011 and 2012 rates, price pressures will likely gain traction later this year from tight labor market conditions and perhaps from less benign import prices (COE prices have also started to rise again, which will contribute to higher CPI inflation).

Thus, while the MAS is unlikely to be alarmed by the inflation outlook, we expect CPI inflation will print in the 2%-3% range during the remainder of 2013 from the 1.5%-2% range in the last four months, while core inflation should creep toward 2.0%oya by year-end from 1.6% in July.

The people you want to reach are already in this room.

Every quarter, SBR lands on the desks of the founders, CFOs, and directors running Asia's most consequential companies. Every day, they open our newsletter and read our website. It's a room that took twenty years to build — and it's the one most of our partners are trying to get into.

The good news is that the door is open. We work with companies on thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. The shape of the right partnership depends on what you're trying to do, which is why we'd rather start with a conversation than send a rate card.

If you have something this room should know about, tell us. We'll tell you honestly whether we can help, and how.

No rate cards until we understand the brief. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia