SINGAPORE: Singapore’s core inflation fell to 0.6 per cent year-on-year in February, a near four-year low, official figures showed on Monday (Mar 24).
This is down from 0.8 per cent in January and the fifth consecutive fall in the figure.
The last time core inflation was lower than 0.6 per cent was in March 2021, when it came in at 0.5 per cent.
On a month-on-month basis, core inflation - which excludes accommodation and private transport - increased by 0.1 per cent.
Overall inflation eased to 0.9 per cent year-on-year in February from 1.2 per cent in January, reflecting a moderation in private transport inflation in addition to the fall in core inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).
On a month-on-month basis, overall inflation increased by 0.8 per cent.
The drop in core inflation was driven by slower price increases across all broad consumer categories other than retail and other goods.
Food inflation moderated from 1.5 per cent in January to 1.0 per cent in February as the pace of price increases for non-cooked food and prepared meals slowed.
Services inflation also eased, largely due to lower airfares and a steeper decline in holiday expenses, while electricity and gas prices fell more steeply because of a larger drop in electricity prices and a decline in gas prices.
The cost of retail and other goods fell less steeply, from -0.6 per cent in January to -0.4 per cent in February, due to smaller declines in the prices of clothing, footwear, and furniture and furnishings.
Private transport costs rose at a slower pace from 2.8 per cent in January to 1.6 per cent in February due to smaller increases in car and petrol prices.
Accommodation inflation remained at 1.6 per cent as smaller increases in housing rents were offset by larger increases in housing maintenance and repair costs.
The forecast for Singapore’s core inflation this year remains at between 1 per cent to 2 per cent.
Overall inflation is expected to average between 1.5 per cent to 2.5 per cent for the year, reflecting an anticipated pickup in private transport.
“Singapore’s imported inflation is expected to remain moderate, reflecting favourable supply projections for key food commodity markets and forecasts of a decline in global oil prices,” said MAS and MTI.
“While an escalation of trade frictions could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand.”
On the domestic front, the authorities said unit labour costs were projected to rise gradually as nominal wage growth continues to ease, while productivity increases.
“At the same time, enhanced government subsidies for essential services such as public healthcare, preschool education and public transport will continue to dampen services inflation,” they added.
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This is down from 0.8 per cent in January and the fifth consecutive fall in the figure.
The last time core inflation was lower than 0.6 per cent was in March 2021, when it came in at 0.5 per cent.
On a month-on-month basis, core inflation - which excludes accommodation and private transport - increased by 0.1 per cent.
Overall inflation eased to 0.9 per cent year-on-year in February from 1.2 per cent in January, reflecting a moderation in private transport inflation in addition to the fall in core inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).
On a month-on-month basis, overall inflation increased by 0.8 per cent.
SECTORS
The drop in core inflation was driven by slower price increases across all broad consumer categories other than retail and other goods.
Food inflation moderated from 1.5 per cent in January to 1.0 per cent in February as the pace of price increases for non-cooked food and prepared meals slowed.
Services inflation also eased, largely due to lower airfares and a steeper decline in holiday expenses, while electricity and gas prices fell more steeply because of a larger drop in electricity prices and a decline in gas prices.
The cost of retail and other goods fell less steeply, from -0.6 per cent in January to -0.4 per cent in February, due to smaller declines in the prices of clothing, footwear, and furniture and furnishings.
Private transport costs rose at a slower pace from 2.8 per cent in January to 1.6 per cent in February due to smaller increases in car and petrol prices.
Accommodation inflation remained at 1.6 per cent as smaller increases in housing rents were offset by larger increases in housing maintenance and repair costs.
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OUTLOOK
The forecast for Singapore’s core inflation this year remains at between 1 per cent to 2 per cent.
Overall inflation is expected to average between 1.5 per cent to 2.5 per cent for the year, reflecting an anticipated pickup in private transport.
“Singapore’s imported inflation is expected to remain moderate, reflecting favourable supply projections for key food commodity markets and forecasts of a decline in global oil prices,” said MAS and MTI.
“While an escalation of trade frictions could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand.”
On the domestic front, the authorities said unit labour costs were projected to rise gradually as nominal wage growth continues to ease, while productivity increases.
“At the same time, enhanced government subsidies for essential services such as public healthcare, preschool education and public transport will continue to dampen services inflation,” they added.
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