The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) are expecting Singapore’s CPI-All Items inflation to come in at a range of between 5.0% - 6.0% for 2022.
MAS Core Inflation, which doesn’t include private transport and accommodation inflation, is projected to average between 3.0% - 4.0%.
The projections come after Singapore’s core and headline inflation continued their upward trend in June, with new highs.
During the month, Singapore’s CPI-All items inflation grew 6.7% y-o-y, extending from May’s 5.6% y-o-y growth.
As it is, May’s headline inflation represented a high that was not seen since November 2011.
In June, Singapore’s MAS core inflation was up by 4.4% y-o-y, up from the 3.6% y-o-y growth seen in May.
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On a m-o-m basis, CPI-All Items increased by 1.0%, while core CPI rose by 0.7%.
According to the figures released by the MAS and the MTI, the rise in both core inflation and headline was due to “stronger price increases” across the broad categories of services, food, retail & other goods, electricity & gas, as well as private transport and accommodation inflation.
In June, private transport inflation rose as car prices and petrol costs picked up more strongly.
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On July 20, the cost of certificates of entitlement (COE) reached a record high for large automobiles. COEs had also risen broadly across all categories.
Accommodation inflation rose on the back of a larger increase in housing rents.
During the month, services inflation came in higher due to a faster pace of increase in the costs of holiday expenses and point-to-point transport services, as well as airfares.
Hotel room rates in Singapore had reached an average rate of $238.32 in June, the highest since September 2016, according to figures released by the Singapore Tourism Board (STB).
Other categories such as food inflation rose due to the larger increases in the prices of both food services and non-cooked food.
The cost of retail and other goods increased due to the higher cost of medicines and health products, as well as the steeper price increases for clothing and footwear.
Electricity & gas inflation edged up as the average prices of electricity plans offered by Open Electricity Market (OEM) retailers rose at a faster pace.
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Singapore’s wholesale electricity price surged for the second time in a week to over $4,200 for three hours on July 17. The price is close to the maximum limit of $4,500 permitted on the wholesale market. Prices had also spiked briefly to similar levels on July 11.
Looking ahead, MAS and MTI say global inflation is likely to remain inflated.
This is as “key commodity markets continue to face supply constraints and the labour market in many major economies remain tight”.
“In addition, the recovery in domestic demand in some regional economies as Covid-19 restrictions are eased could raise inflation. Hence, upward pressures on Singapore’s import prices are expected to persist,” reads the statement released on July 25.
“On the domestic front, the labour market remains tight and wage growth strong. Amid firm consumer spending, businesses are likely to pass on the increases in the prices of fuel, utilities, and other imported inputs, as well as labour costs, to consumer prices,” it continues.
