Singapore’s headline and core inflation continued to rise in November, with both metrics increasing on a y-o-y basis according to figures released by the Department of Statistics Singapore (SingStat) on Dec 23.
Singapore’s headline consumer price index (CPI), or all-items CPI, rose 3.8% y-o-y in November, compared to the 3.2% increase logged in October.
Meanwhile, MAS core inflation, which excludes the accommodation and private transport sectors, inched up 1.6% y-o-y in November, slightly higher than the 1.5% increase recorded the month before.
According to a separate statement jointly issued by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI), the increase in all-items CPI was underpinned by higher private transport and services inflation.
Private transport inflation rose to 17.9% y-o-y in November compared to an increase of 14.3% the month before, due to a larger increase in car prices. Meanwhile, services inflation clocked in at 1.9% y-o-y, higher than the 1.6% recorded in October, on account of a faster pace of increase in airfares and a smaller decline in telecommunication services costs.
Accommodation inflation edged up to 2.7% y-o-y in November as housing rents increased more rapidly, while electricity and gas prices were up 10% y-o-y in the same month, primarily due to a decline in the number of households on standard price plans for electricity following the exit of some retailers under the Open Electricity Market (OEM).
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Food prices increased by 1.9% y-o-y, primarily on the back of higher non-cooked food inflation.
On the flip side, the cost of retail and other goods fell more sharply, decreasing 0.9% y-o-y in November compared to 0.4% decline the month before. This is due to a larger decline in the price of clothing and footwear.
On a month-on-month (m-o-m) basis, all-items CPI rose 1% in November, accelerating from the 0.3% m-o-m increase in October, while core CPI both rose by 0.2% m-o-m in November, easing from the 0.3% increase the month before.
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According to MAS and MTI, the m-o-m increase in all-items CPI was primarily driven by a sequential pickup in accommodation costs as rebates for service and conservancy charges were disbursed to households living in HDB flats in October, but not in November.
Looking ahead, MAS and MTI reiterate that global inflation has remained elevated and it is likely to persist for some time, underpinned by “firm” crude oil prices, supply-demand mismatch in various markets, and transportation bottlenecks.
As the global and regional economic recoveries progress, underlying inflation in Singapore’s major trading partners is also projected to gradually increase.
In Singapore, MAS and MTI expect the labour market recovery to “become more entrenched” as restrictions ease and economic activity picks up. A greater pass-through of higher business costs to consumer prices is also anticipated as the domestic Covid-19 situation stabilises.
A “steady increase in core inflation” is expected by MTI and MAS in the quarters ahead, backed by the recovery in economic activity as well as rising import and labour costs.
In its joint statement, MAS and MTI narrowed their projection for MAS core inflation for 2021 to an average of 0.9%. Previously, MAS core inflation was estimated to come in “near the upper end” of the 0% to 1% range forecasted. For 2022, their inflation forecast has been retained at between 1% to 2% in 2022.
Meanwhile, the all-items CPI is forecasted to come in at 2.3% for 2021, higher than the 2% forecasted previously, on the back of the sharp rise in private transport costs in recent months due to higher Certificates of Entitlement (COE) premiums. For 2022, MAS and MTI have retained their forecasted average between 1.5% to 2.5%.
Photo: Bloomberg
