Singapore’s core inflation remained unchanged at 5 percent year-on-year in April, as reported by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI). Lower inflation in categories such as electricity and gas, food, and retail and other goods offset the higher inflation observed in travel-related services.
Core inflation had reached a 14-year high of 5.5 percent in January and February before dropping to 5 percent in March. Core inflation excludes accommodation and private transport costs. Economists in a Reuters poll had predicted a 4.7 percent increase in core inflation for April.
Overall inflation rose to 5.7 percent year-on-year in April, up from 5.5 percent in the previous month, primarily driven by higher inflation in services and private transport.
In April, electricity and gas inflation declined to 2.7 percent year-on-year, a decrease from 12.2 percent in March. This drop was attributed to smaller increases in electricity costs and the gas tariff. Regulated electricity tariffs fell by 0.9 percent in the second quarter of the year, in contrast to the 14.9 percent increase in the first quarter.
Food inflation moderated to 7.1 percent in April from 7.7 percent in the previous month, mainly due to slower price increases in non-cooked food and prepared meals.
Inflation for retail and other goods eased to 2.9 percent in April from 3.3 percent, driven by slower price growth in household durables, clothing, and footwear. The cost of personal effects decreased.
Services inflation increased to 4.3 percent from 3.4 percent, primarily influenced by higher air fares and a faster pace of growth in holiday expenses.
Private transport inflation rose to 10.4 percent in April from 8.6 percent in the previous month, driven by steeper increases in car prices.
Accommodation inflation edged up to 4.9 percent as the smaller rise in housing rentals was outweighed by a larger increase in housing maintenance and repair costs.
MAS and MTI noted that global supply chain disruptions have eased, resulting in moderated consumer goods inflation in advanced economies. Energy and food commodity prices have also declined from their peak levels last year, leading to a decline in Singapore’s import prices.
Looking ahead, core inflation is expected to remain elevated in the coming months before gradually slowing in the second half of the year as imported inflation decreases and the domestic labor market eases. MAS and MTI anticipate a moderation in private transport and accommodation inflation due to increased COE (Certificate of Entitlement) quota and a rise in the supply of rental housing units.
The authorities’ forecasts for headline and core inflation in 2023 remain unchanged. Headline inflation is projected to average between 5.5 percent and 6.5 percent, while core inflation is expected to average between 3.5 percent and 4.5 percent. Excluding the transitory effects of the 1 percentage point increase in the Goods and Services Tax to 8 percent, headline inflation is expected to be between 4.5 percent and 5.5 percent, with core inflation projected to be between 2.5 percent and 3.5 percent.
MAS and MTI highlighted upside risks, including potential shocks to global commodity prices and persistently tight domestic labor market conditions. Conversely, downside risks include a sharper-than-expected downturn in advanced economies, which could lead to a general easing of inflationary pressures. Also learn about The Singaporean Economic Model: Lessons and Similarities from Around the World.
