SINGAPORE, Sept 25 — Singapore’s core inflation moderated to 3.4 per cent on a year-on-year basis in August, from 3.8 per cent in July.
In a joint statement today, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said the dip from 3.8 per cent in July was due to lower inflation for services, food and retail and other goods.
MAS, the central bank, monitors core inflation which excludes the components of “accommodation” and “private transport” as they tend to be significantly influenced by supply-side administrative policies and are volatile.
Meanwhile, the Consumer Price Index (CPI)-All Items inflation eased to 4.0 per cent in August, from 4.1 per cent in July.
“This was due to declines in core and accommodation inflation, which more than offset an increase in private transport inflation,” according to the statement.
On a monthly basis, core CPI rose by 0.1 per cent, on account of higher food and services costs while the CPI-All Items increased by 0.9 per cent as accommodation and private transport costs picked up.
As for the outlook, MAS and MTI said global supply chain frictions have largely eased, and food commodity prices remain below year-ago levels.
Consumer price inflation in Singapore’s major trading partners has also been on a gradual moderating trend.
Thus, the prices of Singapore’s imported goods overall have continued to decline in year-on-year terms, notwithstanding increases in oil prices since July, the statement said.
On the domestic front, unit labour costs are expected to rise further in the near term, though at a slower pace.
Businesses are likely to continue passing through higher labour costs to consumer prices, albeit more gradually amid the slowdown in domestic economic activity.
“Taking into account all factors, core inflation is expected to moderate further over the next few months as imported costs stay low compared to year-ago levels and the current tightness in the domestic labour market eases,” said the agencies.
For 2023, as a whole, headline and core inflation are projected to average between 4.5-5.5 per cent and 3.5-4.5 per cent, respectively.
Excluding the transitory effects of the 1.0 per cent-point increase in the Goods and Services Tax (GST) to 8.0 per cent, headline and core inflation are expected to come in at 3.5-4.5 per cent and 2.5-3.5 per cent, respectively.
Upside risks remain, including fresh shocks to global energy and food commodity prices and more persistent-than-expected tightness in the domestic labour market.
At the same time, there are also downside risks such as a sharper-than-projected slowdown in the global economy which could induce a greater easing of inflationary pressures. — Bernama
