Singapore’s core inflation eased slightly to 5.1 per cent in October, driven by smaller increases in electricity and gas prices, retail, as well as other goods and service, official data showed on Wednesday (Nov 23).
This is lower than the 5.3 per cent reported in September. It is the first-time core inflation has eased since February.
Core inflation excludes accommodation and private transport costs.
The headline consumer price index, or overall inflation, was 6.7 per cent year-on-year in October, lower than the 7.5 per cent in the previous month as private transport inflation eased, alongside the moderation in core inflation
“Core Inflation is projected to stay elevated in the next few quarters before slowing more discernibly in H2 2023 as the current tightness in the domestic labour market eases and global inflation moderates,” said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI), Can reported.
For 2022 as a whole, overall inflation is expected to average about 6 per cent and core inflation about 4 per cent.
In their outlook, the authorities said the demand conditions in major economies have softened while supply chain frictions have continued to ease.
“Prices of energy and food commodities have come off the peaks reached earlier in the year, but remain high given ongoing supply constraints.”
Additionally, labour markets in major advanced economies are still tight, keeping wage pressures strong. Singapore’s imported inflation across a range of goods and services is expected to remain significant for some time.
On the domestic front, unit labour costs will increase further in the near term alongside robust wage growth. At the same time, the cost of utilities is likely to remain elevated, said MTI and MAS.
Firms are expected to continue to pass through accumulated import, labour and other business costs to consumer prices amid resilient demand.
Car and accommodation cost increases are also anticipated to stay firm in the quarters ahead amid tight COE quotas for cars and strong demand for rental housing, respectively.
In 2023, taking into account all factors including the increase for the Goods and Services Tax, the authorities said Singapore’s headline and core inflation are projected to average 5.5 per cent to 6.5 per cent and 3.5 per cent and 4.5 per cent respectively.
“Excluding the transitory effects of the GST hike, headline and core inflation are expected to come in at 4.5 to 5.5 per cent and 2.5 to 3.5 per cent, respectively.”
MAS and MTI added that there are upside risks to the inflation outlook, including from fresh shocks to global commodity prices and more persistent-than-expected external inflation.
