SINGAPORE: Singapore’s core inflation rose further to 4.8 per cent in July, driven mainly by stronger increases in the prices of food, electricity and gas, official data on Tuesday (Aug 23) showed.
This is higher than the figure of 4.4 per cent in June and surpassed a Reuters forecast of a 4.7 per cent increase.
The last time Singapore reported higher year-on-year growth was in November 2008, when core inflation was 5.5 per cent.
Core inflation excludes accommodation and private transport costs.
The headline consumer price index, or overall inflation, rose to 7 per cent year-on-year in July, surpassing the 6.7 per cent reported in June.
“Apart from higher core inflation, both private transport and accommodation inflation also increased in July,” said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint media release.
OVERALL INFLATION INCREASES
Overall inflation increased in July, mainly due to higher inflation for food, electricity and gas, as well as accommodation.
Food inflation came in higher due to steeper increases in the prices of both food services and non-cooked food, hitting 6.1 per cent in July.
Inflation for electricity and gas rose to 24 per cent in July, compared to 20 per cent in June, on the back of a larger increase in electricity and gas tariffs.
Accommodation inflation also picked up due to a faster pace of increase in housing rents, hitting 4.6 per cent in July.
Services inflation rose to 3.5 per cent in July as the costs of outpatient services, airfares, as well as recreational and cultural services recorded larger increases.
Private transport inflation rose to 22.2 per cent from 21.9 per cent in June due to a stronger pickup in car prices.
Meanwhile, prices of retail and other goods registered a slower pace of increase, coming in at 2.8 per cent in July, as inflation for telecommunication equipment, medicines and health products declined. At the same time, the cost of personal effects fell.
SUPPLY CHAIN FRICTIONS EASED SLIGHTLY
Globally, supply chain frictions have eased slightly and some commodity prices have levelled off, said MAS and MTI.
But they added that global inflation is likely to stay elevated in the near term as key commodity markets continue to face supply constraints. Labour markets in many major economies also remain tight.
Additionally, with the easing of COVID-19 restrictions, the recovery in domestic demand in some regional economies could raise inflation. Hence, upward pressures on Singapore’s import prices could persist, said MAS and MTI.
“On the domestic front, the labour market remains tight, keeping wage growth strong. Amid firm consumer spending, businesses are likely to pass on increases in the prices of fuel, utilities and other imported inputs, as well as labour costs, to consumer prices,” they added.
Authorities said MAS core inflation is projected to stay elevated over the next few months before it begins to ease towards the end of the year.
Car and accommodation cost increases are also likely to stay firm for the rest of the year.
For the full year, overall inflation is expected to come in at 5 per cent to 6 per cent, while MAS core inflation is projected to average at 3 per cent to 4 per cent.
“Fresh shocks to global commodity prices, as well as domestic wage pressures remain as upside risks to inflation,” said the authorities.
At the National Day Rally on Sunday, Prime Minister Lee Hsien Loong said the Government is ready to do more if the situation of rising costs worsens.
Even before the Russia-Ukraine war, inflation was already becoming a problem, said Mr Lee. The COVID-19 pandemic had disrupted supply chains and prompted developed countries to roll out huge spending packages.
Russia’s invasion of Ukraine in February worsened the situation by disrupting supplies of oil, gas and grain, pushing up global prices.
The Prime Minister said the Government is “doing everything necessary” to support Singaporeans, especially middle- and lower-income families.
Measures include cash payouts, rebates under the GST Voucher-U Save scheme and for service and conservancy charges, Community Development Council vouchers and MediSave top-ups.
In June, Deputy Prime Minister and Finance Minister Lawrence Wong announced a S$1.5 billion support package targeted at providing immediate relief for lower-income and more vulnerable groups.
MAS has also tightened monetary policy four times since October last year, allowing the Singapore currency to strengthen.
“The Government also stands ready to do more to help Singaporeans if things worsen,” Mr Lee said. “But the basic reality is that international economic conditions have shifted.”