Singapore’s headline and core inflation continued its upward trajectory, with both metrics showing improvements on a y-o-y basis in October.

According to figures released by the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) on Nov 23, Singapore’s CPI-All items inflation rose 3.2% y-o-y in October, while MAS core inflation inched up 1.5% y-o-y in the same month.

The increase in core inflation was attributable to higher services and food inflation, as well as a smaller decline in the cost of retail and other goods.

Meanwhile, the uptick for CPI-All items was due to stronger private transport and accommodation inflation, in addition to the higher core inflation.

In October, private transport inflation rose on the back of a higher increase in car prices, while accommodation inflation was lifted due to a larger increase in housing rents.

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Services inflation rose mainly due to higher inflation for airfares and holiday expenses.

Tuition and other fees, as well as prices of recreational and cultural services saw larger increases.

Food inflation edged up due to the faster pace of rising non-cooked food prices. Inflation of prepared meals remained broadly unchanged.

Electricity and gas costs rose at a slower pace on the back of smaller increases in electricity and gas tariffs from the same period the year before.

Retail and other goods was the only sector to see a decline in inflation on a y-o-y basis, albeit at a slower pace. This was due to a smaller fall in the prices of clothing and footwear and telecommunication equipment.

On a month-on-month (m-o-m) basis, CPI-All items and core CPI both rose by 0.3% in October.


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The increase in CPI-All items was driven by higher private transport costs amid the rise in car prices, while the higher core CPI was attributable to a pickup in service and electricity & gas costs.

According to the joint statement by MAS and MTI, global inflation has remained elevated and it is likely to persist for some time.

“Notably, higher crude oil prices are supported by tight supply conditions, as well as strengthening demand. The supply-demand mismatch in various commodities and goods markets, as well as bottlenecks in global transportation, are likely to continue in the near term,” reads the statement.

Amid the gradual recovery in the global and regional economies, underlying inflation in Singapore’s major trading partners is also projected to gradually increase.

In Singapore, the labour market is expected to recover on the back of the easing of Covid-19 restrictions and a pickup in economic activity. Wages have also picked up and are anticipated to rise “at a steady pace”.

Consumer demand should also pick up as the pandemic stabilizes.

Rising imported and labour costs, alongside the recovery in domestic economic activity, will

support a steady increase in core inflation in the quarters ahead.

For FY2021, MAS core inflation is estimated to come in near the upper end of the 0-1% range as forecasted. It is projected to increase further to 1-2% in FY2022.

CPI-All items inflation is forecast to come in around 2% in FY2021 and average 1.5-2.5% in FY2022.

“Amid construction delays, accommodation inflation should remain firm and continue to support CPI-All Items inflation in 2022. Meanwhile, private transport inflation is likely to moderate next year on the back of a slower pace of increase in COE premiums and petrol costs,” adds the statement.

Photo: Bloomberg