The worst of the global price shocks triggered by the war in Ukraine and Covid-induced supply disruptions probably isn’t over yet, with the next risk being inflation getting firmly entrenched in the economy.
That’s the assessment of the Monetary Authority of Singapore in its 2021-22 annual report released Tuesday, which sees inflation easing only next year as major central banks withdraw policy support and supply challenges are addressed. The outlook is subject to considerable uncertainty, it said.
“A key risk is that the current upsurge in inflation could become embedded in price and wage settings, worsening the output sacrifice required to restore price stability,” the MAS said in the report. “Additional strains on supply chains could cause further price shocks, increasing the risk of a de-anchoring of inflation expectations.”