Singapore Core Inflation Slows More Than Expected

Singapore’s core inflation eased more than expected in March due to lower cost for services and food, preliminary data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed Monday.

The MAS core inflation slowed to 5.0 percent from 5.5 percent in February. Economists had forecast 5.10 percent.

“This was driven by lower inflation for services, food and retail & other goods,” the MAS and MTI said in a joint statement.

The overall consumer price index rose 5.5 percent year-on-year following a 6.3 percent increase in February. Economists had forecast a 5.6 percent inflation.

The easing was attributed to a decline in private transport inflation, in addition to the fall in core inflation.

A smaller increase in car prices and a steeper decline in petrol costs led to the slowing in the private transport inflation from 12.1 percent to 8.6 percent.

Slower pace of increase in point-to-point transport fares and decline in other transport costs led to the moderation in services inflation from 3.9 percent to 3.4 percent.

Modest increases in the prices of prepared meals and non-cooked food caused food inflation to fall from 8.1 percent to 7.7 percent.

Meanwhile, electricity and gas inflation rose slightly to 12.2 percent from 12.1 percent due to a larger increase in electricity costs.

On a month-on-month basis, the core CPI rose 0.2 percent and the overall CPI climbed 0.5 percent in March.

MAS core inflation expected to stay elevated in the next few months though it is forecast to remain on a broad moderating path, before slowing more discernibly in the second half of 2023 as imported inflation falls further and the current tightness in the domestic labor market eases, the MAS and MTI said.

Headline and core inflation are projected to average 5.5-6.5 percent and 3.5-4.5 percent, respectively, in the year 2023.

Excluding the transitory effects of the 1 percentage-point increase in the GST to 8 percent, headline and core inflation are expected to come in at 4.5-5.5 percent and 2.5-3.5 percent, respectively.

Earlier this month, the MAS kept its policy stance unchanged as policymakers assessed that the past five successive tightening was sufficient to curb imported inflation and to bring medium-term price stability.

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