Singapore’s headline inflation in September rose 2% y-o-y and 0.3% m-o-m from August, but easing from the 2.2% y-o-y growth seen in the previous month. The lower headline print was mainly due to a sharper fall in private transport costs from a larger decline in car prices and lower petrol prices.
Accommodation inflation also eased due to a smaller increase in housing rents. .
Meanwhile, Money Authority Singapore (MAS) core inflation, which excludes accommodation and housing grew by 2.8% y-o-y and 0.1% m-o-m in September.
Services inflation stood unchanged as the drop in telecommunications services offset growth seen in tuition fees, holiday expenses and insurance costs.
Food inflation grew 2.6% y-o-y and 0.1% m-o-m as food prices rose at a slower pace. At the same time, housing and utilities inflation increased by 3.2% y-o-y and 0.1% m-o-m.
Healthcare inflation rose 4.1% y-o-y and 0.7% m-o-m and education edged up 3.4% y-o-y and 0.6% m-o-m.
See also: Analysts maintain positive outlook on manufacturing sector in 2024 despite slowdown in IP
On the other hand, clothing and footwear inflation eased, decreasing 0.3% y-o-y, albeit growing 0.3% m-o-m. Inflation in transport and communication both dipped 1.0% y-o-y, while increasing 0.7% m-o-m and 0.4% m-o-m respectively.
Household durables and services inflation rose 0.3% y-o-y and eased 0.2% m-o-m, while miscellaneous goods and services inflation grew 1.2% y-o-y and declined 0.4% m-o-m.
Finally, recreation and culture inflation grew 4.5% y-o-y but stayed flat on a monthly basis.
Although global energy prices have been volatile in recent weeks, they have on average remained below the levels a year ago.
Singapore’s imported manufactured goods prices have also continued to be on a broad decline. Services inflation remains on a moderating trend and should ease further over the rest of 2024.
On the domestic front, unit labour costs are projected to rise more gradually alongside moderating nominal wage growth and improving productivity.
Meanwhile, the pass-through of earlier increases in labour costs to consumer prices has largely peaked and is expected to continue at a reduced pace.
All in, MAS core inflation is expected to stay on a gradual moderating trend and reach around 2% by end-2024.
Core inflation is projected to average 2.5% to 3.0% in 2024 as a whole, and step down further to 1.5% to 2.5% in 2025.
Accommodation inflation is anticipated to come in lower next year as leasing demand moderates.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
This should partly offset an anticipated pickup in private transport inflation amid still-firm demand for cars. Taking these factors into account, CPI-all Items inflation is expected to come in at around 2.5% for the whole of 2024 and average 1.5% to 2.5% in 2025.
Risks to the inflation outlook are relatively balanced.
Domestically, stronger-than-expected labour market conditions could lead to a slower easing in unit labour cost growth, while an intensification of geopolitical tensions could lead to higher commodity prices and add to imported costs.
Conversely, a significant downturn in the global economy could induce a greater easing of cost and price pressures, causing domestic inflation to come in materially lower than expected.
