Singapore Inflation Rises Slightly To 5.7%

Singapore’s consumer price inflation increased somewhat in April after easing to a 9-month low in March amid increased costs for services and private transport, while the core figure was unchanged, data published by the Monetary Authority of Singapore and the Ministry of Trade and Industry showed on Tuesday.

The consumer price index, or CPI, climbed 5.7 percent year-over-year in May, slightly faster than the 5.5 percent increase in the previous month. Economists had forecast inflation to remain stable at 5.5 percent.

Meanwhile, the MAS core inflation stood at 5.0 percent in May, the same as in the previous month. Economists had expected the rate to ease to 4.7 percent.

The core inflation was unchanged as lower price growth for electricity and gas, food and retail, and other goods were offset by higher inflation for travel-related services.

Month-on-month, the core consumer prices moved up 0.4 percent in April, due to the higher cost of holiday expenses and airfare. The total CPI edged up 0.1 percent versus a 0.5 percent gain in the prior month.

Among the main categories, private transport inflation accelerated to 10.4 percent from 8.6 percent as car prices rose more steeply.

Costs for services grew at a faster annual rate of 4.3 percent in April after a 3.4 percent rise in March. The upward trend was attributed to increased airfares and holiday expenses.

On the other hand, food inflation eased to 7.1 percent from 7.7 percent, and that of electricity and gas moderated markedly to 2.7 percent from 12.2 percent due to smaller increases in both electricity costs and the gas tariff.

Looking ahead, core inflation is expected to stay elevated in the next few months. Nonetheless, it will 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 said.

Domestically, unit labor costs are likely to increase in the near term. Businesses will continue passing through accumulated labor costs to consumers, though at a more moderate pace amid the slowdown in domestic economic activity.

Singapore’s import prices declined on an annual basis on the back of easing global supply chain pressures and energy and food commodity prices.

For 2023 as a whole, headline and core inflation are projected to average 5.5-6.5 percent and 3.5- 4.5 percent, respectively.

There are upside risks to the inflation outlook, including from fresh shocks to global commodity prices and more persistent-than-expected tightness in the domestic labor market, the MAS said.

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