SINGAPORE: Singapore’s core inflation in February eased to 2.2 per cent on a year-on-year basis, down from the 2.4 per cent in January, official data released on Wednesday (Mar 23) showed.
This was reflected in lower inflation for services, food and electricity and gas, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) in a joint media release.
February’s consumer price index (CPI), or overall inflation, came in at 4.3 per cent year-on-year, up from 4 per cent in January.
Core inflation excludes accommodation and private transport costs. These items are excluded as they tend to be significantly influenced by supply-side administrative policies and are volatile.
“Global inflation is expected to stay high for some time before easing in the latter half of the year,” said MAS and MTI.
“In the near term, heightened geopolitical risks and tight supply conditions will keep crude oil prices elevated.”
“Supply-demand mismatches in commodity markets due in part to geopolitical factors, bottlenecks in global transportation, as well as labour shortages in a number of Singapore’s major trading partners are also likely to persist.”
INFLATION EASED FOR FOOD, SERVICES, ELECTRICITY AND GAS
On a year-on-year basis, food inflation in February eased to 2.3 per cent from 2.6 per cent the month before. This was because lower inflation for non-cooked food such as fish and seafood, fruits and vegetables more than offset higher inflation for prepared meals.
Electricity and gas inflation in February dropped to 16.7 per cent from 17.2 per cent the month before. Prices rose at a slower pace as the average electricity prices paid by households under the Open Electricity Market saw a smaller increase, MAS and MTI said.
Services inflation fell to 2 per cent from 2.4 per cent.
Meanwhile, private transport inflation rose to 17.2 per cent from 14 per cent as car prices picked up at a stronger pace.
Accommodation inflation also rose, by 0.2 per cent to 3.3 per cent in February, due to a larger increase in housing rents, MAS and MTI said.
The cost of retail and other goods also went up, to 0.2 per cent from a decline of 0.3 per cent.
DOMESTIC FRONT
“On the domestic front, the labour market should continue to tighten and lead to strengthened wage pressures over the course of the year,” MAS and MTI said.
“Cost increases are likely to filter through to higher services prices as private consumption picks up.”
They added that car and accommodation cost increases are “likely to remain strong in the near term, keeping headline inflation elevated”.
Core inflation is forecast to pick up further in the near term, and could reach 3 per cent by the middle of the year before easing in the second half of 2022 as external inflation recedes.
The rising cost of air travel is expected to account for a significant part of the increase in core inflation in the near term, MAS and MTI said.
“For 2022 as a whole, MAS core inflation is projected to average 2–3% while CPI-All Items inflation is forecast to come in within 2.5–3.5%.”