Headline inflation falls to 4.1% while core inflation declines to 3.8% on y-o-y basis in July

On a m-o-m basis, core inflation rose by 0.2% while headline inflation fell by 0.2%.

Singapore’s headline and core inflation figures eased again in July. Monetary Authority of Singapore (MAS) core inflation fell to 3.8% on a y-o-y basis due to a small increase in food prices and a fall in electricity and gas costs.

Headline inflation or CPI-All Items inflation, which includes accommodation and private transport, eased to 4.1% y-o-y due to lower private transport inflation as well.

On a m-o-m basis, core inflation rose by 0.2% due to higher costs for services and food while headline inflation fell by 0.2% due to lower accommodation and private transport costs.

In July, private transport inflation fell as car prices rose at a slower pace. Food inflation also eased as the pace of increase in the costs for prepared meals and non-cooked food moderated.

Electricity and gas costs fell due to lower electricity and gas tariffs from the year before.

Service inflation stood broadly unchanged as higher holiday expenses were offset by a smaller increase in the cost of outpatient services and lower airfares.

Retail and other goods inflation fell due to a small rise in the prices of clothing and footwear.

Accommodation inflation rose due to higher service and conservancy charges (S&CC).

Looking ahead, MAS and the Ministry of Trade and Industry (MTI) say they expect core inflation to ease further over the next few months as imported costs stay low compared to the levels from the year before. Inflation is also expected to moderate as the current tightness in the domestic labour market eases.

At the same time, inflation for private transport and accommodation is also expected to ease with the higher quota for certificates of entitlement (COEs) and a higher number of housing units.

MAS and MTI have kept their full-year estimates unchanged with headline and core inflation projected to average 4.5% – 5.5% and 3.5% – 4.5%, respectively. Excluding the transitory effects of the 1%-point increase in the GST to 8%, headline and core inflation are expected to come in at 3.5% – 4.5% and 2.5% – 3.5%, respectively.

“Upside risks remain, including from fresh shocks to global food commodity prices and more persistent-than-expected tightness in the domestic labour market. At the same time, there are also downside risks such as a sharper-than-projected slowdown in the global economy which could induce a general easing of inflationary pressures,” say MAS and MTI.

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