SINGAPORE: Singapore’s core inflation remained unchanged at 5.5 per cent year-on-year in February, official data showed on Thursday (Mar 23).
The figure is lower than the forecast in a Reuters poll of economists for a 5.8 per cent increase in February.
In January, core inflation had gone up from 5.1 per cent to 5.5 per cent – the highest since November 2008.
Core inflation was unchanged as lower services inflation was broadly offset by higher inflation for retail and other goods and electricity and gas, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).
Core inflation excludes accommodation and private transport costs.
Overall inflation came in at 6.3 per cent year-on-year in February, lower than the 6.6 per cent recorded the month before.
This was mainly driven by lower private transport inflation.
INFLATION FOR FOOD UNCHANGED, SERVICES DOWN
In February, food inflation remained unchanged at 8.1 per cent year-on-year.
This was due to a steeper increase in non-cooked food prices, which was offset by a smaller increase in the prices of prepared meals, said MAS and MTI.
Services inflation, which fell to 3.9 per cent from 4.2 per cent, moderated on the back of lower airfares.
Inflation for retail and other goods increased to 3.8 per cent from 3.3 per cent. This was mainly due to the step-up in tobacco excise duty and a faster pace of increase in the prices of personal care products and recreational & cultural goods.
Finance Minister Lawrence Wong in his Budget speech announced that the government will raise the excise duty on all tobacco products by 15 per cent.
Accommodation inflation dropped slightly to 4.9 per cent from 5 per cent as housing rents rose at a slower pace, according to MAS and MTI.
Electricity and gas inflation rose to 12.1 per cent from the 11.5 per cent in January, picking up on the back of a larger increase in electricity costs.
Private transport inflation slowed from 14.3 per cent to 12.1 per cent due to a smaller increase in car prices and a decline in petrol prices.
“Demand conditions in the major advanced economies have softened and global supply chain frictions have eased,” said MAS and MTI. “More recently, prices of energy commodities have declined.”
However, global food commodity prices remain elevated and core inflation in the major advanced economies is still high.
Growth in Asia is also expected to be resilient, thereby supporting regional inflation.
On the domestic front, unit labour costs are expected to increase further in the near term.
MAS and MTI also expect businesses to continue to pass through accumulated import, labour and other costs to consumer prices amid resilient demand.
Meanwhile, car and accommodation cost increases are likely to stay firm in the quarters ahead on the back of tight COE quotas for cars and strong demand for rental housing, the authorities said.
Core inflation is expected to stay above 5 per cent year-on-year in the first quarter of this year as previously projected. It will remain elevated in the first half of 2023 before “slowing more discernibly in the second half of 2023 as the current tightness in the domestic labour market eases and global inflation moderates”.
For 2023 as a whole, headline and core inflation are projected to average 5.5 to 6.5 per cent and 3.5 to 4.5 per cent, respectively.
Excluding the transitory effects of the 1 percentage point increase in the Goods and Services Tax to 8 per cent, headline and core inflation are expected to come in at 4.5 to 5.5 per cent and 2.5 to 3.5 per cent, respectively.
“There are upside risks to the inflation outlook, including from fresh shocks to global commodity prices and more persistent-than-expected external and domestic sources of inflation,” MAS and MTI said.