SINGAPORE: Singapore’s core inflation eased to 3.1 per cent on-year in March, driven mainly by slower price rises in food and services, data from Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) showed on Tuesday (Apr 23).
March’s inflation figure is lower than the 3.5 per cent forecast by a Reuters poll of economists and compared with 3.6 per cent seen in February.
On a month-on month basis, core inflation - which excludes accommodation and private transport - fell by 0.2 per cent in March.
Meanwhile consumer price index, or headline inflation, slowed to 2.7 per cent on-year in March, down from 3.4 per cent in February.
On a month-on-month basis, headline inflation decreased by 0.1 per cent in March.
MAS and MTI said the fall in headline inflation largely reflected a fall in private transport costs, as well as lower food and services inflation.
Private transport inflation fell from the 1.4 per cent in February to -0.3 per cent in March, as car prices declined in tandem with lower COE premiums.
Food inflation eased to 3.0 per cent in March, compared with 3.8 per cent in February, mainly due to a smaller increase in the prices of non-cooked food.
Services inflation moderated to 3.9 per cent from 4.2 per cent as airfares fell and holiday expenses rose at a slower pace.
Retail and other goods inflation eased to 0.7 per cent in March from 1.2 per cent, on account of a decline in prices in clothing and footwear, as well as a modest rate of increase in prices of alcoholic drinks and tobacco.
Accommodation inflation edged down to 3.7 per cent from 3.9 per cent due to a smaller increase in housing rents.
Electricity and gas inflation also dipped to 4.8 per cent from 5.2 per cent as electricity costs rose at a more moderate pace.
MAS and MTI said that core inflation is “expected to stay on a gradual moderating trend over the rest of the year as import cost pressures continue to decline and tightness in the domestic labour market eases”.
“Although crude oil prices have risen in recent weeks, global prices for most food commodities, as well as intermediate and final manufactured goods, have continued to decline,” the authorities said.
“In addition, inflation for services associated with overseas travel should moderate further over the course of the year as supply conditions in hospitality sectors around the world improve.”
MAS and MTI said the gradually strengthening Singapore dollar trade-weighted exchange rate should continue to temper Singapore’s imported inflation in the coming months.
On the domestic front, increases in unit labour costs have slowed in tandem with the cooling labour market.
“Nonetheless, businesses are likely to continue passing through the earlier increases in labour and other business costs to consumer prices, albeit at a reduced pace,” said MAS and MTI.
Meanwhile, private transport inflation is also expected to be lower compared with last year, amid the larger projected COE supply this year.
Accommodation inflation should also continue to ease as the supply of housing units available for rent increases over the course of the year.
MAS and MTI projected both headline inflation and core inflation to average 2.5 per cent to 3.5 per cent for 2024. Excluding the transitory effects of the 1 per cent-point increase in the GST rate to 9 per cent, headline and core inflation are expected to come in at 1.5 per cent to 2.5 per cent.
However, risks to inflation remain, as fresh geopolitical shocks and adverse weather events around the world could put upward pressure on global energy and food prices, as well as shipping costs.
Domestically, stronger-than-expected labour market could also lead to re-acceleration in wage growth.
“Conversely, an unexpected weakening in the global economy could induce a greater easing of cost and price pressures,” said MAS and MTI.
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March’s inflation figure is lower than the 3.5 per cent forecast by a Reuters poll of economists and compared with 3.6 per cent seen in February.
On a month-on month basis, core inflation - which excludes accommodation and private transport - fell by 0.2 per cent in March.
Meanwhile consumer price index, or headline inflation, slowed to 2.7 per cent on-year in March, down from 3.4 per cent in February.
On a month-on-month basis, headline inflation decreased by 0.1 per cent in March.
MAS and MTI said the fall in headline inflation largely reflected a fall in private transport costs, as well as lower food and services inflation.
Private transport inflation fell from the 1.4 per cent in February to -0.3 per cent in March, as car prices declined in tandem with lower COE premiums.
Food inflation eased to 3.0 per cent in March, compared with 3.8 per cent in February, mainly due to a smaller increase in the prices of non-cooked food.
Services inflation moderated to 3.9 per cent from 4.2 per cent as airfares fell and holiday expenses rose at a slower pace.
Retail and other goods inflation eased to 0.7 per cent in March from 1.2 per cent, on account of a decline in prices in clothing and footwear, as well as a modest rate of increase in prices of alcoholic drinks and tobacco.
Accommodation inflation edged down to 3.7 per cent from 3.9 per cent due to a smaller increase in housing rents.
Electricity and gas inflation also dipped to 4.8 per cent from 5.2 per cent as electricity costs rose at a more moderate pace.
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MAS and MTI said that core inflation is “expected to stay on a gradual moderating trend over the rest of the year as import cost pressures continue to decline and tightness in the domestic labour market eases”.
“Although crude oil prices have risen in recent weeks, global prices for most food commodities, as well as intermediate and final manufactured goods, have continued to decline,” the authorities said.
“In addition, inflation for services associated with overseas travel should moderate further over the course of the year as supply conditions in hospitality sectors around the world improve.”
MAS and MTI said the gradually strengthening Singapore dollar trade-weighted exchange rate should continue to temper Singapore’s imported inflation in the coming months.
On the domestic front, increases in unit labour costs have slowed in tandem with the cooling labour market.
“Nonetheless, businesses are likely to continue passing through the earlier increases in labour and other business costs to consumer prices, albeit at a reduced pace,” said MAS and MTI.
Meanwhile, private transport inflation is also expected to be lower compared with last year, amid the larger projected COE supply this year.
Accommodation inflation should also continue to ease as the supply of housing units available for rent increases over the course of the year.
MAS and MTI projected both headline inflation and core inflation to average 2.5 per cent to 3.5 per cent for 2024. Excluding the transitory effects of the 1 per cent-point increase in the GST rate to 9 per cent, headline and core inflation are expected to come in at 1.5 per cent to 2.5 per cent.
However, risks to inflation remain, as fresh geopolitical shocks and adverse weather events around the world could put upward pressure on global energy and food prices, as well as shipping costs.
Domestically, stronger-than-expected labour market could also lead to re-acceleration in wage growth.
“Conversely, an unexpected weakening in the global economy could induce a greater easing of cost and price pressures,” said MAS and MTI.
Continue reading...