Singapore’s core inflation rises to 4.4% in June, highest since November 2008

Singapore’s core inflation in June hit its highest level since November 2008, with stronger price increases across most categories such as services, food, retail, as well as electricity and gas.

Core inflation, which excludes accommodation and private transport costs, came in at 4.4 percent year-on-year in June, up from 3.6 percent in May, official data released on Monday (Jul 25) showed.

The last time Singapore reported higher year-on-year growth was in November 2008, when core inflation was 5.5 percent.

The headline consumer price index, or overall inflation, rose to 6.7 percent year-on-year in June, surpassing the 5.6 percent reported in May.

Food inflation hit 5.4 percent in June compared to 4.5 percent in May as a result of larger increases in the prices of both food services and non-cooked food, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint media release.

Inflation for retail and other goods also picked up, coming in at 3.1 percent in June from 1.8 percent in May, as the cost of medicines and health products rose, and the price of clothing and footwear recorded a steeper increase.

Electricity and gas prices edged up, with inflation at 20 percent in June compared to 19.9 percent in May as the average prices of electricity plans offered by Open Electricity Market (OEM) retailers rose at a faster pace, said MAS and MTI.

Services inflation rose to 3.4 percent from 2.6 percent in May due to a faster pace of increase in the costs of holiday expenses and point-to-point transport services, as well as airfares.

Accommodation inflation rose 0.2 percent to hit 4.2 percent in June due to a larger increase in housing rents.

Private transport inflation jumped to 21.9 percent from 18.5 percent in May amid rising car prices and petrol costs.

MAS said in its annual report earlier this month that core inflation is projected to increase to a peak of 4 to 4.5 percent in the third quarter, before easing towards the end of this year at around 3.5 to 4 percent.

This is much higher than what Singapore has been used to, said MAS managing director Ravi Menon on Jul 19.

With inflation rising, the MAS tightened monetary policy four times in the last nine months, including two off-cycle moves in January and July.

For the year as a whole, core inflation is projected to average between 3 percent and 4 percent, while headline inflation is forecast to come in at between 5 percent and 6 percent, said MAS and MTI on Monday.

They noted that globally, supply chain frictions have eased slightly and some increases in commodity prices have leveled off.

“Nevertheless, global inflation is likely to stay elevated as key commodity markets continue to face supply constraints and the labor market in many major economies remain tight,” they added.

“In addition, the recovery in domestic demand in some regional economies as COVID-19 restrictions are eased could raise inflation. Hence, upward pressures on Singapore’s import prices are expected to persist.”

SOURCE: NEWS AGENCIES