Singapore Inflation At 7-Month Low On Weaker Transport Costs

Singapore consumer price inflation eased at the end of the year to the lowest level in seven months, largely due to a moderation in private transport costs, while core price growth remained steady, data published by the Monetary Authority of Singapore, or MAS, and the Ministry of Trade and Industry showed on Wednesday.

The consumer price index, or CPI, climbed 6.5 percent year-over-year in December, slower than November’s 6.7 percent stable rate of increase.

Further, the latest inflation rate was the weakest since May 2022, when prices had risen 5.6 percent.

At the same time, MAS core inflation held steady for the second straight month at 5.1 percent, as softer rises in retail and other goods as well as electricity and gas were offset by higher prices for food and services.

Month-on-month, core consumer prices rose 0.6 percent, and overall consumer prices moved up 0.2 percent.

Read more: Singapore Exports Slump 20.6% On Weaker Demand

Among the main categories, prices of electricity and gas grew the most, by 16.5 percent from last year, but slightly below the 16.7 percent gain in November.

Private transport inflation slowed to 15.5 percent in December from 17.2 percent, which had the greatest impact on the overall easing trend in inflation amid a reduction in prices for cars and petrol.

Accommodation cost growth eased marginally to 4.7 percent from 4.8 percent, due to a softer rise in housing rents.

Services inflation increased to 3.7 percent from 3.6 percent, and food inflation accelerated to 7.5 percent from 7.3 percent.

During the year 2022, consumer price inflation stood at 6.1 percent versus 2.3 percent in 2021. Over the same period, core inflation accelerated sharply to 4.1 percent from 0.9 percent.

Read more: Singapore GDP Growth Weakens Sharply On Lackluster Manufacturing

Looking ahead, Singapore’s imported inflation is expected to remain firm for some time, as wage pressures remain high in major advanced economies due to tight labor markets, and food and energy prices continued to remain elevated despite some easing.

There will be further increases in unit labor costs along with robust wage growth on the domestic front in the near term, and the cost of utilities is likely to remain high.

MAS Core inflation was projected to stay elevated in the first half of this year before slowing more discernibly in the second half of the year, 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 report said.

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