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Singapore’s core inflation slows, CPI-All items inflation sees a marginal increase

Singapore’s core inflation slowed to 3.0% in September, influenced by decreased food and retail costs, while overall inflation marginally rose to 4.1%, driven by higher private transport expenses.



SINGAPORE: Recent data released by the Ministry of Trade and Industry (MTI) on Monday (23 Oct) reveals continuing trends in Singapore’s inflation rates, with core consumer prices rising at a slower rate for the fifth consecutive month in September.

This deceleration was significantly influenced by lower inflation rates for categories such as food, retail, and other goods.

In September, core inflation, which provides a more accurate representation of the average Singaporean household’s regular expenses by excluding private transport and accommodation costs, stood at 3.0% year on year. This marks a reduction from the 3.4% recorded in August.

However, the overall Consumer Price Index (CPI) for All Items indicated a slight rise, reaching 4.1% year on year in September, up from 4.0% in August.

This increase was predominantly propelled by soaring private transport inflation, catalyzed by record certificate of entitlement (COE) prices, which counterbalanced declines in core and accommodation inflation.

Examining the month-on-month changes, core consumer prices inched upwards by 0.1% in September, a reflection of the escalating costs in food and services.

Concurrently, headline inflation experienced a more substantial rise of 0.5%, driven chiefly by the increased costs associated with private transport.

Detailed insights from the report highlight several specific areas:

  • Private Transport: There was a significant jump in inflation in this category, with a surge to 8.5% in September from 6.3% in August. The increase was spurred by rapid hikes in both car and petrol prices, coupled with COE prices reaching record levels due to intensified demand from motor dealers.
  • Retail & Other Goods: This sector saw the most pronounced month-on-month decline in inflation, dropping to 0.9% in September from 2.0% in August.
  • Food: Inflation here decreased to 4.3% from 4.8% in the previous month, with the costs of non-cooked food items and prepared meals rising at a more conservative pace.
  • Accommodation: Inflation in this area slightly reduced to 4.3% from 4.4%, attributable to a moderation in housing rents.
  • Electricity & Gas: Inflation remained steady in this category, with costs falling by 1.4% year on year in September. The consistency is due to a smaller decrease in electricity prices being compensated by a more considerable drop in gas prices.
  • Services: This segment maintained a stable inflation rate of 3.1%, where an increase in telecommunication services costs was counteracted by a lesser rise in holiday-related expenses.

Looking forward, the Monetary Authority of Singapore (MAS) and MTI anticipate core inflation to continue its downward trend, projecting it to settle between 2.5% and 3.0% year on year by December.

It is expected to average between 2.5% and 3.5% throughout 2024. Overall headline inflation is forecasted to average around 5% for 2023, followed by 3% to 4% in 2024.

The agencies underscore that the increase in the goods and services tax (GST) rate scheduled for early 2024 is likely to momentarily influence core inflation.

However, it is expected to return to a generally moderating trend throughout 2024 as import cost pressures subside and the domestic labour market’s intensity continues to diminish.

Despite these projections, MAS and MTI acknowledge potential upside risks to inflation, particularly from unforeseen global market shifts.

These include possible spikes in global energy and food commodity prices due to geopolitical unrest and unpredictable weather patterns, which remain variables of concern.

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