Singapore May industrial production likely to expand 9.0 pct y/y; inflation seen higher from H2 2018 onwards: DBS Bank

Singapore’s consumer price-related inflation and industrial production data are on tap this week. The price barometer meter is expected to remain sluggish. Expectation is for the reading to inch up a tad to just 0.2 percent y/y, from 0.1 percent previously, according to the latest research report from DBS Bank.

But before one starts to feel jittery about the return of negative inflation, it pays to note that factors weighing down on inflation are largely domestic while external price pressure is brewing. Imported inflationary pressure is rising, led mainly by the recent uptrend in oil prices and a moderately weaker currency. Expect inflation to start heading higher from the second half of this year onwards.

Industrial output for May is expected to expand 9.9 percent. This is partly due to the low base effect, which will likely dissipate in the coming months. Moreover, manufacturers are facing capacity constraint in the near term, which could see output growth easing slightly lower. Unless manufacturers are willing to invest in capacity to boost overall output, else the upside on production growth will be limited.