Singapore’s core inflation slowed to 2.2 per cent in February from 2.4 per cent in January, official figures released on Wednesday, March 23, showed. The Monetary Authority of Singapore and the Ministry of Trade and Industry, which published the numbers jointly, pointed to cooler price growth in services, food, and electricity and gas.
The calmer core reading did not carry over to the broader measure. Overall consumer prices rose 4.3 per cent from a year earlier, against 4 per cent the month before. Core inflation leaves out accommodation and private transport, two items the authorities treat as volatile because administrative policies on the supply side sway them heavily.
Where prices eased and where they did not
Food inflation dropped to 2.3 per cent from 2.6 per cent. Cheaper fish, seafood, fruit and vegetables more than made up for pricier prepared meals. Electricity and gas slipped to 16.7 per cent from 17.2 per cent, because households on the Open Electricity Market saw a smaller rise in average prices. Services eased to 2 per cent from 2.4 per cent.
Other categories moved the opposite way. Private transport inflation jumped to 17.2 per cent from 14 per cent as car prices picked up faster. Accommodation rose by 0.2 per cent to 3.3 per cent on a larger rise in housing rents. Retail and other goods turned positive at 0.2 per cent, after a decline of 0.3 per cent in January.
The outlook from MAS and MTI
The two agencies expect the lull to be short. “Global inflation is expected to stay high for some time before easing in the latter half of the year,” they said. They also said “heightened geopolitical risks and tight supply conditions will keep crude oil prices elevated,” and that commodity-market mismatches, transport bottlenecks and labour shortages among major trading partners are likely to persist.
At home, the labour market should keep tightening, and that should strengthen wage pressures through the year. “Cost increases are likely to filter through to higher services prices as private consumption picks up,” the agencies said. Car and accommodation costs should stay strong in the near term and keep headline inflation elevated.
Core inflation is forecast to rise further and could reach 3 per cent by the middle of the year, then ease in the second half of 2022 as external inflation recedes. Dearer air travel is expected to account for a large share of that near-term increase.
For 2022 as a whole, MAS core inflation is projected to average 2 to 3 per cent. The forecast for CPI-All Items inflation is 2.5 to 3.5 per cent.
