Singapore Inflation Eases To 6.1%, Lowest In 9 Months

Singapore’s consumer price inflation moderated in February to the lowest level in nine months amid a slowdown in private transport charges, data published by the Monetary Authority of Singapore and the Ministry of Trade and Industry showed on Thursday.

The consumer price index, or CPI, climbed 6.3 percent year-over-year in February, slower than the 6.6 percent increase in the previous month. Economists had forecast inflation to ease marginally to 6.5 percent.

Moreover, this was the slowest inflation rate since May 2022, when prices had grown 5.6 percent.

The MAS core inflation stood at 5.5 percent in February, the same as in the previous month.

The core inflation was unchanged as lower services inflation was broadly offset by higher rate of growth in prices for retail and other goods, and electricity and gas.

Month-on-month, the core consumer prices showed no variations from January, when prices increased by 0.8 percent. The total CPI moved up 0.6 percent in February versus a 0.2 percent gain in the prior month.

Among the main categories, private transport inflation slowed to 12.1 percent from 14.3 percent due to a smaller increase in car prices and a decline in petrol prices.

Costs for services grew at a slower annual rate of 3.9 percent in February after a 4.2 percent rise in January. The slowdown was attributed to lower airfares.

Meanwhile, food inflation held steady at 8.1 percent and electricity and gas price growth rose to 12.1 percent from 11.5 percent on the back of a larger increase in electricity costs.

Looking ahead, Singapore’s non-oil import prices could therefore remain relatively firm for some time, as global food commodity prices remain elevated and core inflation in the major advanced economies is still high.

Domestically, unit labor costs are likely to increase in the near term due to resilient demand. Businesses will continue passing through accumulated imports, labor, and other costs to consumers.

MAS core inflation is expected to stay above 5 percent in the first quarter of 2023, as previously projected.

The rate is expected to remain elevated in the first half of this year before slowing more discernibly in the second half as the current tightness in the domestic labor market eases and global inflation moderates.

For 2023 as a whole, taking into account all factors including the GST increase, headline and core inflation are projected to average 5.5-6.5 percent and 3.5-4.5 percent, respectively.

There are upside risks to the inflation outlook, including from fresh shocks to global commodity prices and more persistent-than-expected external and domestic sources of inflation, the MAS said.

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