Core inflation in Singapore accelerated faster than expected to the highest in a decade, in sync with the central bank’s projections that price growth might worsen before it gets better on geopolitical shocks and supply-chain backlogs.
The core consumer price index (CPI) tracked by the Monetary Authority of Singapore (MAS) — which excludes private transport and accommodation costs — rose 2.9 percent last month, on the back of costlier food and services. That is the fastest since March 2012 and is showing a quickening for the past eight of nine months.
That compares with the median forecast in a Bloomberg survey for a 2.5 percent increase, and the 2.2 percent pace in February.
Photo: Bloomberg
“External inflationary pressures have intensified amid sharp increases in global commodity prices and renewed supply chain disruptions driven by both the Russia-Ukraine conflict and the regional pandemic situation,” the MAS and the Singaporean Ministry of Trade and Industry said in a joint statement yesterday. “MAS core inflation is forecast to pick up further in the coming months, before moderating towards the end of the year as some of the external inflationary pressures recede.”
Singapore’s headline inflation last month rose by 5.4 percent from a year earlier, compared with estimates for a 4.7 percent increase and February’s 4.3 percent.
Among drivers of the all-items index were transportation costs, which picked up at the fastest pace since 1980.
The MAS and ministry reiterated estimates that core inflation should be between 2.5 and 3.5 percent this year, while headline inflation runs within 4.5 and 5.5 percent.
The figures followed the central bank’s decision earlier this month to tighten monetary policy for a third time since October last year, as it warned inflation pressures remain a risk in the medium term.
Singaporean officials have recently been warning that the inflation could be longer-lasting as part of a new economic reality, beyond immediate supply and demand shocks.
Tharman Shanmugaratnam, MAS chairman and a senior minister, said at a Boao Forum for Asia event on Friday that “we are dealing with a fundamentally new macroeconomic environment globally.”
The new environment requires big spending on new supply capacity, mobilizing and “de-risking” private capital to invest in emerging economies, and raising taxes in both advanced and emerging economies, Tharman said.
Separately, the Bank of Korea should stay on a path to policy normalization as inflation remains a more pressing concern than a slowdown in economic growth, Governor Rhee Chang-yong said.
“I’m more worried about inflation so far,” the newly installed governor said yesterday in his first meeting with media since taking office last week. “I’ll still need to look at the data to tell what the pace of interest-rate hikes should be.”
Rhee said last week in his parliamentary hearing that he favors higher interest rates unless there is a threat to the economic outlook.
STATE SUBSIDIES: The talks over a factory in Dresden have a top end on par with what Japan is offering TSMC and outdo a cap other firms are being offered in Europe Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is in talks to receive German government subsidies for as much as 50 percent of the costs to build a new semiconductor fab in the country, people familiar with the matter said. The government is in ongoing negotiations with TSMC, as well as its partners on the project — Bosch Ltd, NXP Semiconductors NV and Infineon Technologies AG — the people said, asking not to be identified because the deliberations are private. No final decisions have been made and the final subsidy amount could still change. Any state aid must also
South Korea would avoid capitalizing on China’s ban on a US chipmaker, seeing the move by Beijing as an attempt to drive a wedge between Seoul and Washington, a person familiar with the situation said. The South Korean government would not encourage its memorychip firms to grab market share in China lost by Micron Technology Inc, which has been barred for use in critical industries by Beijing on national security grounds, the person said. China is the biggest market for South Korea semiconductor firms Samsung Electronics Co and SK Hynix Inc and home to some of their factories. Their operations in China
GEOPOLITICAL RISKS: The company has a deep collaboration with TSMC, but it is also open to working with Samsung Electronics Co and Intel Corp, Nvidia’s CEO said Nvidia Corp, the world’s biggest artificial intelligence (AI) GPU supplier, yesterday said that it is diversifying its supply chain partners in order to enhance supply chain resilience amid geopolitical tensions. “All of our supply chain is designed for maximum diversity and redundancy so that we can have resilience. Our company is very big and so we have a lot of customers depending on us. And so our supply chain resilience is very important to us. We manufacture in as many places as we can,” Nvidia founder and chief executive officer Jensen Huang (黃仁勳) said in response to a reporter’s question in
BIG MARKET: As growth in the number of devices and data traffic accelerates, it will not be possible to send everything to the cloud, a Qualcomm executive said Qualcomm Inc is betting the future of artificial intelligence (AI) will require more computing power than what the cloud alone can provide. The world’s largest maker of smartphone processors is transitioning from a communications company into an “intelligent edge computing” firm, Qualcomm senior vice president Alex Katouzian said. The edge in question is the mobile device that a user taps to access a network or service, and Katouzian used his time headlining one of the major keynote events at the Computex show in Taipei to make the case for how big a market that would be. The US company’s chips help smartphones harness