Disinflation may pause in 2024, influenced by higher GST, utilities costs, and wage pressures
Singapore’s inflation has slowed significantly, dropping to 3.7% in December from a high of 7.5% in August 2022. Economists expect this trend to continue into 2024, but bringing inflation back down to historical levels will be a difficult task.
Despite the cooling trend, inflationary pressures remain present. Higher Goods and Services Tax (GST), rising utilities costs, and wage cost pressures could hinder further disinflation in the first half of 2024. As a result, economists predict a pause in the current disinflationary momentum during this period.
The Monetary Authority of Singapore (MAS), which oversees the country’s monetary policy, has stated that its current policy settings are “appropriate” and decided to maintain them in its first review of 2024, held on January 29.
While inflation has moderated, the combination of these ongoing cost pressures may challenge the government’s efforts to achieve a significant reduction in inflation to levels seen in previous years.
