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Singapore core inflation hits 4.4% in June, highest level since global financial crisis
SINGAPORE’S core inflation hit 4.4 per cent in June – up from 3.6 per cent in May, and the first time that it has breached the 4.0 per cent handle since end-2008.
Meanwhile, headline inflation – which includes accommodation and private transport costs – surged to 6.7 per cent, from 5.6 per in May, according to figures out on Monday (Jul 25).
Said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) in a joint statement: “Inflationary pressures will remain elevated in the months ahead.”
While core inflation should peak in the third quarter, they added: “There remain upside risks to inflation from fresh shocks to global commodity prices, as well as domestic wage pressures.
That’s as the MAS this month raised its core inflation forecasts to between 3.0 per cent and 4.0 per cent in 2022, up from 2.5 per cent to 3.5 per cent before.
The all-items consumer price index (CPI) reading is now expected to fall between 5.0 per cent and 6.0 per cent, compared with an earlier forecast of 4.5 per cent to 5.5 per cent.
The MAS made a shock off-cycle move to tighten monetary policy in mid-July, which it said then was to slow the pace of inflation and “lean against price pressures becoming more persistent”.
The MAS and MTI noted that June’s higher core inflation “reflected stronger price increases” across services, food, retail and other goods, and electricity and gas, while private transport and accommodation expenses – which are excluded from core CPI – also climbed at a faster pace.
Private transport cost 21.9 per cent more in June than the year before, up from 18.5 per cent in May, on a stronger increase in car prices and petrol costs. Meanwhile, accommodation inflation ticked up to 4.2 per cent, from 4.0 per cent in May, on costlier housing rents.
On the bread-and-butter front, food inflation grew to 5.4 per cent, from 4.5 per cent in May.
Food inflation was driven by a 10.1 per cent jump in the price of meat, as well as an 8.4 per cent rise in the price of fish and seafood, and 6.2 per cent increase in milk, cheese, and eggs.
Meanwhile, food services costs grew by 5.3 per cent. Hawker food was up by 5.7 per cent, catering services by 5.3 per cent, restaurant food by 4.8 per cent, and fast food by 4.7 per cent.
Services costs rose by 3.4 per cent in June, against 2.6 per cent in May, which was attributed to faster growth in holiday expenses, airfares, and point-to-point transport service costs.
The cost of retail and other goods spiked by 3.1 per cent, compared with 1.8 per cent in May, with the MAS and MTI highlighting pricier medicines, health products, clothes and shoes.
Meanwhile, electricity and gas cost 20.0 per cent more in June than the year before, compared with 19.9 per cent in May, on higher average prices of Open Electricity Market electricity plans.
The MAS and MTI reported that “upward pressures on Singapore’s import prices are expected to persist”, even as a tight domestic labour market, strong wage growth and “firm consumer spending” could see a pass-through of utilities, imported inputs and other costs to consumers.
Source: https://www.businesstimes.com.sg/government-economy/singapore-core-inflation-hits-44-in-june-highest-level-since-global-financial