Singapore’s Core Inflation Reaches 4.8% In July, Highest In Over 13 Years
Living in Singapore can be expensive, but residents might’ve noticed the prices of some daily items getting even more expensive of late.
In a media release on Tuesday (23 Aug), the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) revealed that Singapore’s core inflation has hit 4.8% in July, up from 4.4% in June. The increase is largely driven by price surges in food, electricity, and gas.
This is the highest rate of inflation in over 13 years. Core inflation reportedly hit 5.5% back in 2008.
Core inflation soars to 4.8% in Jul 2022
In Jul 2022, Singapore’s core inflation rose to 4.8% on a year-on-year basis, up from 4.4% in Jun 2022. According to the press release, the rise in inflation was largely due to stronger increases in the prices of food, electricity, and gas.
Even though core inflation excludes accommodations and private transport costs, expenses in both areas have also gone up last month.
Meanwhile, the headline consumer price index, or overall inflation, rose from 6.7% in June to 7% in July.
Similar to core inflation, the increase was mainly driven by higher inflation for food, electricity, gas, and accommodation.
Of these, electricity and gas inflation came in the highest at 24%. The 4% rise from last month is attributed to the larger increase in tariffs.
Food inflation came in higher due to steep increases in the prices of food services as well as non-cooked food, hitting 6.1%.
Accommodation inflation also picked up from 4.2% to 4.6% due to a faster pace of increase in housing rents.
A stronger pickup in car prices led to the rise in private transport inflation, which came in at 22.2%.
Services inflation also edged up following “larger increases” in costs associated with outpatient services, airfares, recreational, and cultural services.
On the other hand, prices of “retail and other goods” registered a slower pace of increase while the cost of personal effects fell, leading to a lower inflation rate of 2.8%.
This was due to a decline in inflation for telecommunication equipment as well as medicine and health products.
Global inflation likely to remain elevated
MAS and MTI shared that supply chain frictions have eased globally, and some commodity prices have levelled off.
However, global inflation is likely to remain high in the “near term” as key commodity markets are still facing constraints and labour markets in major economies remain tight.
As more countries ease Covid-19 restrictions and their domestic demand recovers, it could also raise inflation in these economies.
This will, in turn, result in persisting upward pressures on Singapore’s import prices.
Inflation expected to ease towards end of year
In Singapore, the labour market remains tight, keeping wage growth strong.
With firm consumer spending, businesses are likely to pass on increases in the costs of fuel, utility, and labour to customers.
Because of this, core inflation is projected to stay elevated over the next few months and ease towards the end of the year.
Car and accommodation price increases are also likely to remain high for the rest of the year.
For the full year, overall inflation and core inflation are expected to come in at 5% to 6% and 3% to 4%, respectively.
Nonetheless, fresh shocks to global commodity prices and domestic wage pressures are upside risks to inflation.
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Featured image by MS News.
