Core inflation to fall below 5.0% in remaining quarters

RHB expects core inflation to fall at around 2.5% at year-end.

Inflation will ease further from Q2 to Q4 given that supply-push drivers have softened materially, said RHB. 

Core inflation, in particular, will likely fall below 5.0% in the remaining quarters, added RHB.

“We continue to see declining momentum into 2Q – 4Q23 to around 2.5% at year-end,” the analyst said.

Apart from the easing of supply-push inflation, RHB also expects demand-pull inflation to slow in the near term.

“We observe that a technical recession risk has magnified in 1H23. A technical recession is defined as two consecutive quarters of negative QoQ prints. Singapore’s GDP has clocked a -0.7% QoQ SA QoQ print in 1Q23 at -0.7%, the first sub-zero print since 2Q22. Our proprietary leading GDP model also suggests that growth will slow in 2Q23, on the back of headwinds expected in Singapore’s externally-facing industries,” RHB said.

For the whole year, RHB expects headline and core inflation at 4.0% YoY in 2023.