‍In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.

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US inflation remains high as housing costs bite

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Inflation in the US has cooled for a seventh month in a row, but prices continue to rise far more quickly than is considered healthy.

The inflation rate was 6.4% in the 12 months to January, driven higher by jumps in housing, food and energy costs. This was down  slightly from 6.5% in December. However, officials have warned that it will take time to stabilise prices, despite the most recent signs of improvement.

Among food prices, the cost of beef has fallen from a year ago. But egg prices are up 70% compared with January 2021, while butter and margarine costs have jumped by nearly a third. Prices for televisions, smartphones and used cars and trucks have fallen compared with a year ago.

However, housing costs - one of the biggest components of the price index -have climbed more than 7%,driven by higher rents, and prices of services such as haircuts continue to rise rapidly.

The US central bank, the Federal Reserve, has responded to the problem by aggressively raising interest rates, a move intended to cool the economy and ease the pressures pushing up prices.

But the jobs market has remained more robust than expected, fuelling intense debate among economists about how high borrowing costs will have to go to return inflation to the 2% rate considered healthy - and whether the economy can handle the increase without tipping into a painful recession.‍

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Singapore posts worst non-oil domestic exports in a decade

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Singapore’s non-oil domestic exports plunged 25% year on year in January — their largest drop in 10 years.‍

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The latest government data showed Singapore’s non-oil exports to its top markets led the wider decline, with exports to China falling by more than 41%, to the U.S. by 31.5% and to Hong Kong by more than 55% for the month.

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The reading marks the fourth consecutive contraction and the steepest fall since February 2013, when the economy saw more than a 30% decline.

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Non-oil retained exports also fell 10.4% in January, following the 7.2% decline in December. Total trade also fell by 10.4% year on year, with total exports dropping 9.6% and imports contracting by 11.3%.

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The Singapore dollar weakened slightly after the release and the Straits Times index traded marginally higher in Friday’s morning trade.

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The disappointing trade data comes days after Singapore released its latest budget for the year. Experts expect Singapore’s economy to grow marginally by 0.7% in the full year.

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