Singapore core inflation climbs to 5.3% in September; headline inflation steady at 7.5%

SINGAPORE’s core inflation rose further to 5.3 per cent in September but headline inflation held steady at 7.5 per cent, both in line with economists’ expectations, according to Department of Statistics consumer price index (CPI) data on Tuesday (Oct 25).

The pickup in core inflation was on account of larger price increases for items such as food, services and retail and other goods. But headline inflation – which includes accommodation and private transport costs – remained the same as higher core and accommodation inflation were offset by lower private transport inflation.

The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) maintained their full-year expectations for headline inflation at 6.0 per cent and core inflation at 4 per cent.

For 2023, headline and core inflation still are projected to average 5.5-6.5 per cent and 3.5-4.5 per cent respectively. Excluding the transitory effects of the GST hike, headline and core inflation are expected to come in at 4.5-5.6 per cent and 2.5-3.5 per cent respectively.

But MAS and MTI also noted upside risks to this outlook, “including from fresh shocks to global commodity prices and more persistent-than-expected external inflation”.

Food inflation rose to 6.9 per cent in September, up from 6.4 per cent in August. Inflation rates also rose for accommodation; services; and retail and other goods. Electricity and gas inflation stayed steady at 23.9 per cent.

But private transport inflation moderated to 22.3 per cent, slowing from 24. 1 per cent in August, due to a slower pace of increase in car and petrol prices.

On a month-on-month basis, core CPI and headline CPI increased by 0.5 per cent and 0.4 per cent respectively

MAS and MTI noted that globally, “demand conditions in major economies have softened while supply chain frictions have continued to ease”, but imported inflation is still “expected to remain significant for some time”.

Domestically, firms are expected to pass through rises in import, labour and other business costs to consumer prices, “amid resilient demand”.

Core inflation is expected to stay elevated in the next few quarters before slowing in the second half of 2023 as domestic labour market tightness eases and global inflation moderates, they said.