Singapore’s CPI-All Items inflation (or headline inflation) increased by 6.7% y-o-y in November, although inflation increased slightly by 1.0% on a m-o-m basis.
MAS Core Inflation, which excludes the “accommodation” and “private transport” components, came in at 5.1% higher on a y-o-y basis, and 0.2% higher on a m-o-m basis.
MAS stands for the Monetary Authority of Singapore.
According to the MAS and the Ministry of Trade and Industry (MTI), the MAS Core Inflation saw smaller increases in the costs of services and electricity & gas, but they were offset by the steeper rises in the costs for retail & other goods and food.
Accordingly, headline inflation held steady on the back of the unchanged core inflation. At the same time, accommodation and private transport moderated “marginally”.
In November, inflation for the services sector eased on the back of a smaller increase in airfares. Meanwhile, inflation for electricity & gas fell partly due to the higher base in the year before.
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Accommodation inflation edged down as housing rents rose at a more gradual pace, while inflation for private transport slowed slightly in line with the smaller increases in car and petrol prices.
Food inflation rose on account of higher food services inflation during the month.
The cost of retail & other goods saw inflation rise due to the steeper increases in the prices of clothing & footwear, personal care products, as well as medicines & health products.
Looking ahead, MAS and MTI warn that Singapore’s imported inflation across a range of goods and services is expected to “remain significant” for some time.
Unit labour costs are also expected to increase in the near term, alongside “robust wage growth”. Cost of utilities, too, are expected to remain elevated. Furthermore, firms are “are expected to continue to pass through accumulated import, labour and other business costs to consumer prices amid resilient demand”.
The cost increases for cars and accommodation are expected to “stay firm” in the quarters ahead. This is on the back of the tight certificate of entitlement (COE) quotas and the strong demand for rental housing.
As such, MAS Core Inflation is estimated to remain elevated in the next few quarters before slowing “discernibly” in the 2H2023.
In 2022, headline inflation is expected to average around 6.0% while core inflation is expected to average around 4.0%.
In 2023, headline and core inflation are projected to range between 5.5%–6.5% and 3.5%–4.5%, taking into account all factors, including the increase in GST.
This is compared to the respondents in MAS’s December survey of professional forecasters, where market watchers are estimating 2023’s headline inflation to average around 5.2%. MAS Core Inflation for 2023 is pegged to come in at around 4.0%.
Excluding the effects of the GST hike, MAS and MTI posit that 2023’s headline and core inflation are expected to come in at 4.5%–5.5% and 2.5%–3.5%, respectively.
“There are upside risks to the inflation outlook, including from fresh shocks to global commodity prices and more persistent-than-expected external inflation,” say MAS and MTI.
