SINGAPORE: Singapore’s core inflation edged up in August to 1.1 per cent, from 1 per cent in July, with the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) maintaining their inflation forecasts ahead of the MAS’s next policy meeting in October.
Department of Statistics (Singstat) consumer price index (CPI) figures on Thursday showed headline inflation easing to 2.4 per cent, down from 2.5 per cent in July, in line with economists’ expectations, report agencies.
Accommodation inflation was 1.7 per cent, up from 1.4 per cent the month before, with a stronger pickup in housing rents.
The rise in core inflation was driven mostly by higher food inflation of 1.5 per cent, up from 1.1 per cent in July, and a smaller decline in the cost of retail and other goods, of -1 per cent compared to -1.2 per cent in July.
Services inflation edged down to 1.2 per cent on a steeper fall in telecommunication services fees, while electricity and gas inflation fell to 9.7 per cent.
Most Singstat expenditure categories - distinct from the MAS and MTI categories - saw positive inflation in August. The exceptions were clothing and footwear (-6.2 per cent), communication (-2.2 per cent), and miscellaneous goods and services (-0.1 per cent).
Barclays economist Brian Tan noted that despite core inflation edging up, “there remain few signs of substantial demand-pull pressures and the official statement appeared to downplay external inflation pressures”.
Core inflation is expected to increase gradually in the coming months. But with accommodation inflation possibly continuing to rise on the back of strong demand for rental accommodation, the MAS and MTI now see this as supporting “a modest rise” in headline inflation in the fourth quarter, in contrast to their earlier expectation for headline inflation to ease.
For the full year, core inflation is still expected to average zero to 1 per cent, and headline inflation, 1 to 2 per cent.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye maintained their full-year forecasts of 1.8 per cent and 1 per cent for headline and core inflation respectively, but raised their 2022 headline inflation forecast to 1.5 per cent, from 1.2 per cent previously. They expect persistent supply chain disruption to keep energy, food, and freight costs elevated.