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SINGAPORE: Singapore’s core inflation eased in March, thanks to lower prices on food and services. The easing trend is expected to continue as long as there aren’t any unexpected supply disruptions due to geopolitical tensions.

Yahoo Finance reported that according to official data released on Tuesday, the gains in core inflation, which excludes housing and private transportation costs, slowed down to 3.1% compared to last year.

This figure was below the 3.5% economists predicted in a Bloomberg survey. It’s a step back from February’s seven-month high of 3.6%. Headline inflation also dropped, sliding to 2.7% from February’s 3.4%, marking the lowest rate in 30 months.

This news comes as a bit of a breather for the Monetary Authority of Singapore (MAS).

They decided earlier this month to keep their policies unchanged, seeing the potential for inflation to ease off by the end of the year and expecting the economy, which heavily relies on trade, to pick up steam.

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The next policy review is scheduled for July.

Read also: MAS may keep monetary policy unchanged in April; economists predict possible adjustment in July

The MAS and the Ministry of Trade and Industry (MTI) are sticking to their forecasts that core and all-items inflation will hover between 2.5% and 3.5% for the year.

However, some storm clouds are on the horizon. Geopolitical tensions and unexpected weather could increase global energy, food, and shipping prices. In a joint statement on Tuesday, the MAS and the MTI warned about these risks.

MAS has been using the exchange rate rather than interest rates to keep prices stable, opting to let the Singapore dollar appreciate slightly to offset any imported inflation.

But they’ve got to strike a balance. If the local currency climbs too high, it could hurt exports. /TISG

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