Singapore’s core inflation eases in February but risks remain
The Monetary Authority of Singapore reported that core inflation fell to 2.2 percent in February, a drop from January’s 2.4 percent and below the 2.6 percent median forecast compiled by Bloomberg. The easing was driven by smaller price increases in services, food and energy components. Despite the lower reading, the same release warned that upside risks to inflation from geopolitical and pandemic‑related shocks are growing. Analysts note that the February figure strips out private transport and accommodation, the two most volatile categories in Singapore’s small, open economy, giving a clearer view of underlying demand pressures.
Even with the decline, the core gauge has stayed above 2 percent for eight consecutive months. The slowdown in services came from a more modest rise in holiday costs, while food and electricity tariffs increased at a slower pace than in January.
For consumers, the data offered a brief respite after a year of steady price gains. However, the relief is technical rather than fundamental. The February number does not yet reflect the commodity surge that followed Russia’s invasion of Ukraine.
Front‑month Brent crude has risen about 25 percent since late February, and global wheat prices are at their highest level in 14 years. Those higher costs will feed into utility tariffs and bread prices with a lag, meaning households are likely to feel the impact starting with their March bills.
EIU Singapore analyst Yu Liuqing observed that the print simply did not capture the commodity spike that followed the invasion. Consequently, core inflation is projected to re‑accelerate to 3 percent or more by mid‑year, pushing it well above the Monetary Authority’s long‑run comfort band of 1 to 2 percent. Geopolitical tensions are not the only source of pressure.
Pandemic‑related disruptions continue to strain supply chains. China’s renewed lockdowns, including a sweeping shutdown in Shanghai, add further weight to shipping and manufacturing activities.
Because Singapore imports virtually all of its food and energy and has little domestic production to buffer global price swings, any rise in Chicago wheat prices quickly translates into higher bread costs locally. The Monetary Authority has already tightened policy twice in the past six months, acting in October and again in January, both moves surprising markets. Its primary tool is the exchange rate, allowing the Singapore dollar to appreciate to dampen imported inflation.
This approach works only as long as global price shocks do not outpace the currency’s strength. February’s cooling gave the central bank no reason to pause its tightening cycle.
In fact, the lag in the data means the full effect of the commodity spike will only become visible after it has already reached consumers. Waiting to act would mean responding to a problem that has already arrived. Market participants now anticipate another policy move when the MAS meets in April.
The broader picture shows persistent inflationary pressure: core inflation has not dipped below 2 percent since mid‑2021. The war in Ukraine has injected a new layer of uncertainty into energy and food markets, while China’s zero‑Covid policy keeps supply chains fragile.
As a trade‑dependent city‑state, Singapore absorbs every shock that moves through global markets, with little insulation. For now, the February number offers households a single month of relief. Utility bills are set to rise in March, food prices will follow, and the central bank is likely to tighten again. The war continues, lockdowns persist, and the inflation problem is not disappearing — it is merely appearing later in the data.
Singapore’s(1) core2 inflation3 eases4 in5 February6 but7 risks8 remain9
The10 Monetary11 Authority12 of13 Singapore14 reported15 that16 core17 inflation18 fell19 to20 2.2 percent21 in22 February,23 a24 drop25 from26 January’s27 2.4 percent28 and29 below30 the31 2.6 percent32 median33 forecast34 compiled35 by36 Bloomberg.37 The38 easing39 was40 driven41 by42 smaller43 price44 increases45 in46 services,47 food48 and49 energy50 components51.
