Gradual easing of inflation to stabilise S-Reits: analyst

Inflation slowly eased in October and November 2022.

Singapore Reits will benefit from the gradual decline of inflation, which eased in October and November last year, UOBKayHian said.

US CPI eased for two consecutive months by 0.5ppt in October 2022 and 0.6ppt in November 2022.

“The biggest contributor to the slowdown was energy, which declined 1.6% mom (gasoline: -2.0% mom, electricity: - 0.2% mom and piped gas: -3.5% mom),” said UOBKayHian.

The broker said the slower inflation was due to the relaxed supply chain disruptions since economies reopened after variant infections were already handled in early last year.

Inflation in the US may have already peaked in September 2022 and would continue to be subdued in the first half of 2023.

“In response to the lower inflation, 10-year Singapore government bond yield has eased 40bp to 3.08% in 4Q22,” said UOBKayHian.