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Singapore’s core inflation climbs to 3.3% in October, fueled by surging costs across services and retail

Singapore’s core inflation surged to 3.3% year-on-year in October, driven by heightened inflation in services, retail, and diverse goods.

The Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) highlighted increased electricity and gas costs as contributing factors.

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SINGAPORE: Official data released on Thursday (23 Nov) revealed that Singapore’s core inflation escalated to 3.3 per cent year-on-year in October.

This increase was primarily attributed to elevated inflation across services, retail, and various goods.

In a press release, the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) pointed out that the surge also stemmed from escalated electricity and gas costs.

This upturn marks the first rise in core inflation after a continuous downward trend since March.

Notably, core inflation peaked at 5.5 per cent in January and February this year, marking a 14-year high.

In September, Singapore’s core inflation dropped to 3 per cent, representing the lowest figure since March 2022.

It’s worth noting that core inflation excludes accommodation and private transport costs from its calculation.

On an overall scale, inflation climbed to 4.7 per cent year-on-year in October, up from the previous month’s 4.1 per cent.

MTI and MAS attributed this increase to the heightened inflation in private transport, coupled with the rise in core inflation.

Services inflation climbed to 3.4 per cent

In October, services inflation climbed to 3.4 per cent, marking an increase from September’s 3.1 per cent.

This growth was primarily propelled by a notable surge in holiday expenses.

Moreover, tuition fees, other educational expenses, and outpatient, and hospital services costs experienced accelerated growth rates.

The inflation for retail and other goods rose to 1.6 per cent in October. This uptick was attributed to stronger price increases in personal care products and medical goods. Additionally, the decline in prices of clothing and footwear slowed down during this period.

October saw a 1.8 per cent rise in electricity and gas costs, primarily due to increased tariffs.

Food inflation eased to 4.1 per cent in October as the prices of non-cooked food and prepared meals witnessed smaller increases.

Private transport inflation soared to 11.7 per cent in October, largely driven by a rapid increase in car prices.

In October, accommodation inflation slightly decreased to 4.2 per cent as the rate of housing rent growth moderated.

MAS and MTI highlight volatility of global crude oil prices

MAS and MTI highlighted the volatility of global crude oil prices, which have recently declined after an earlier increase.

Additionally, global prices for various food commodities and both intermediate and final manufactured goods have continued to show moderation.

These elements, combined with the stronger Singapore dollar trade-weighted exchange rate, are anticipated to alleviate import cost pressures in the upcoming quarters.

On the local front, there’s an expectation for a slower rise in unit labor costs, aligning with the gradual cooling of the labor market.

“Businesses are likely to continue passing through higher
labour costs to consumer prices, but at a more gradual pace. ”

MAS Core Inflation is projected to edge down to between 2.5–3.0% y-o-y by December.

In early 2024, core inflation is expected to be impacted by the increase in the GST rate as well as seasonal effects.

However, MAS and MTI said core inflation should resume a broadly moderating trend over the course of 2024, as import cost pressures decline and tightness in the domestic labour market continues to ease.

Fluctuations expected amid COE swings

In the remaining months of 2023, overall inflation is anticipated to experience fluctuations due to recent swings in Certificate of Entitlement (COE) premiums.

Looking ahead to the upcoming year, overall inflation is predicted to decline, mainly driven by an expected slowdown in private transport inflation as COE quotas are projected to increase.

Additionally, as housing supply rises, accommodation inflation is anticipated to ease, according to statements by MTI and MAS.

For the entirety of 2023, the forecasted average for overall inflation is around 5 per cent, while core inflation is expected to average approximately 4 per cent.

Moving into 2024, projections suggest an average overall inflation range of 3 to 4 per cent, and core inflation is estimated to average between 2.5 to 3.5 per cent.

When excluding the transitory effects of the 1 percentage point increase in the GST rate to 9 per cent, the outlook indicates an overall inflation rate ranging from 2.5 to 3.5 per cent.

Core inflation, under the same exclusion, is forecasted to fall between 1.5 and 2.5 per cent.

“Upside risks remain, including from fresh shocks to global energy and food commodity prices due to geopolitical conflicts and adverse weather events, and more persistent-than-expected tightness in the domestic labour market,” said the statement.

“At the same time, there are also downside risks such as a sharper-than-projected slowdown in the global economy, which could induce a greater easing of cost and price pressures.”

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NTUC is the biggest culprit of increases. From $6.50/- a can of coffee powder is now almost $10.00/-

We should migrate to online purchase or go JB.

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