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Singapore’s February headline inflation meets expectations at 0.5%
THERE were no surprises from Singapore’s headline inflation in February, with consumer prices up by 0.5 per cent year on year – a tick above the 0.4 per cent growth notched the month before.
Private economists polled by Bloomberg had expected an increase of 0.5 per cent on average, although the actual figure was just shy of the median forecast of 0.6 per cent.
Core inflation – a central bank indicator that strips out housing and private transport costs – was at 1.5 per cent, down from 1.7 per cent in January, according to the latest figures from the Department of Statistics, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) on Monday.
Inflation was supported by a more gradual fall in housing and transport expenses, as home rents, car and petrol prices did not drop as much. This made up for a slowing pace of price increases in categories such as services, retail items and electricity and gas.
Services inflation came in at 1.5 per cent, from 1.7 per cent before, on a slower rise in school fees and airfares, while the retail inflation was 1.1 per cent, against 1.4 per cent previously, as the increase in clothing and shoe prices was more modest.
Food inflation was flat at 1.4 per cent, with the jump in prepared meal prices offset by a smaller rise in the prices of non-cooked food items. The cost of eating out was 1.6 per cent more than the year before, led by a 1.7 per cent hike in hawker food prices, while food items – such as bread, cereals, fruits and vegetables – cost 1 per cent more overall.
Meanwhile, electricity and gas prices were up by 5.5 per cent in February, against 6.5 per cent in January, which the MAS and the MTI said in a joint statement reflected the effect of the national rollout – in phases – of the liberalised Open Electricity Market.
Singapore previously lowered its full-year headline, or all-items, inflation forecast after a disappointing January reading, citing the toll of the global oil price slump.
Headline inflation is expected to be between 0.5 and 1.5 per cent, while core inflationis projected to fall between 1.5 and 2.5 per cent, the MAS and the MTI said in February. They reaffirmed this forecast in their latest joint statement.
Private-sector analysts also recently trimmed their inflation expectations, in the latest quarterly survey by the MAS. They have predicted headline inflation of 1.1 per cent in 2019, from 1.3 per cent before, while their core inflation forecast was cut from 1.8 to 1.7 per cent.
Watchers at United Overseas Bank, who had previously expected a third round of monetary policy tightening at the MAS’s half-yearly meeting in April, said in a report on Monday that they now expect the MAS to leave Singdollar policy unchanged “given that core inflation pressures will likely persist into H2 2019”.
“We continue to see higher inflation pressures into the year, given the supportive domestic labour market conditions which should underpin wage growth, though the likely delay of core inflation to cross its critical 2 per cent handle into H2 2019 could mean less impetus for MAS to tighten monetary policy at this Juncture,” the report added.
Source: https://www.businesstimes.com.sg/government-economy/singapores-february-headline-inflation-meets-expectations-at-05