S’pore’s core inflation continue positive trend

25 May, 2021 12:00 AM printer

SINGAPORE: Singapore’s core inflation edged up to 0.6 per cent in April compared to the same period last year, a positive reading for the third consecutive month, the Department of Statistics’ consumer price index (CPI) figures showed on Monday.

Core inflation, which excludes the cost of accommodation and private road transport, was 0.6 per cent in the previous month, 0.5 per cent in March and 0.2 per cent in February. Headline inflation came in at 2.1 per cent, up from 1.3 per cent, report agencies.

Increases in both core and headline inflation can be partially attributed to the low base in April last year, when prices fell sharply, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint statement.

Smaller declines in the costs of electricity and gas and retail and other goods drove the increase in core inflation in April.

Higher energy costs led to upward revisions of electricity and gas tariffs, slowing the fall in electricity and gas prices. Electricity and gas inflation rose to -2.4 per cent yoy in April, compared to -9.7 per cent yoy in March.

The cost of retail and other goods also fell more gradually as the cost of telecommunications equipment and personal effects rose, while the cost of personal care products fell less.

Inflation for services and food bucked the trend. Services inflation eased as telecommunication services fees and health insurance inflation came in lower. Food inflation slowed to 1 per cent in April from 1.4 per cent previously, as non-cooked food inflation was lower.

The agencies also said that the headline increase in April came on the back of higher inflation for private transport and accommodation and smaller declines in the costs of electricity and gas and retail and other goods.

In April last year, private transport costs declined sharply due to the suspension of Electronic Road Pricing. Boosted by the low base, private transport inflation was 12.9 per cent this April, with car prices rising significantly. Accommodation inflation inched up from March as a result of stronger rises in housing rents.

“External inflation has risen amid the recovery in global oil prices and turnaround in producer price inflation in the major economies,” the MAS and MTI said in the statement. “While there are some upside risks, the upward pressure on global inflation should ease in the latter part of this year.”

The statement added that large increases in oil prices would likely be restricted by surplus oil production capacity, and import price pressures in Singapore would be moderated by negative output gaps in some of the Republic’s major trading partners.

The MAS and MTI expect that headline inflation in Singapore should remain stable in the near term and ease later in the year as base effects peter out.

Core inflation will continue to rise, they said, although restrictions implemented under Phase 2 (Heightened Alert) are projected to dampen the pick-up in underlying inflation. Economic uncertainty will weigh on consumer sentiment and prices. Wage growth is also predicted to be muted.