Singapore’s core inflation slowed in January defying all estimates, amid smaller gains in costs of healthcare to household goods despite an increase in the goods and services tax.
The core gauge, which excludes costs of accommodation and private road transport and is the measure tracked by the Monetary Authority of Singapore, came in at 3.1% last month from a year earlier, compared with the median forecast for a 3.6% increase. All-items inflation printed 2.9% year-on-year, undershooting all estimates in a Bloomberg survey, after a 3.7% reading in December.
On a month-on-month basis, the headline consumer price measure declined 0.7%, amid a 2.1% drop each in housing and transport costs.
The MAS, which uses the exchange rate as its main tool, has kept its policy stance unchanged since April 2023. As the GST rate increased by one-percentage-point this year, the central bank said in its latest review in January that it was appropriate to keep the local dollar on an appreciating path to curb domestic cost pressures and also blunt imported inflation as part of its goal to ensure medium-term price stability.
An expected easing of demand-pull price pressures going forward would give the central bank greater scope to loosen policy settings later in the year, Bloomberg Economics’s Tamara Mast Henderson said in a report before the data. The MAS is due to revisit monetary settings in April.
