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Singapore's core inflation rose to 1.9% in December

The core inflation measure excludes changes in the price of cars and accommodation, which tend to be influenced by government policies and are volatile.
On the domestic front, the improving labour market should underpin a faster pace of wage growth in 2018 and 2019, compared with 2017. (PHOTO: Reuters)

Singapore’s core consumer prices rose to 1.9 per cent on a year-on-year basis in December.

The figure is higher than the 1.7 per cent seen in the preceding month due to larger increases in the cost of services and retail items, said the Monetary Authority of Singapore and Ministry of Trade and Industry in a joint statement on Wednesday (23 January).

It is also higher than the 1.7 per cent year-on-year rise expected by 10 economists in a Reuters poll.

The overall cost of retail items rose by 1.7 per cent in December, faster from the 1.1 per cent gain in November, due to larger increases in the prices of clothing, footwear and household durables.

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Services inflation increased to 1.5 per cent year-on-year last month, up from 1.2 per cent in November, due to a stronger pick-up in holiday expenses and airfares, as well as a smaller decline in telecommunication services fees.

The core inflation measure excludes changes in the price of cars and accommodation, which tend to be influenced by government policies and are volatile.

The all-items or headline inflation rose to 0.5 per cent year-on-year in December, from 0.3 per cent in November, reflecting higher inflation for services and retail items, as well as a smaller drop in accommodation costs.

For the whole of 2018, core inflation rose to 1.7 per cent, from 1.5 per cent the previous year, while headline inflation came in at 0.4 per cent, lower than the 0.6 per cent recorded in 2017.

Improving labour market

External sources of inflation have generally increased over 2018. Global oil prices came in higher on average in 2018 as compared to 2017, while non-oil import prices have also picked up from their trough in the first quarter.

On the domestic front, the improving labour market should underpin a faster pace of wage growth in 2018 and 2019, compared with 2017. Growth in the unit labour cost for services has picked up recently.

Core inflation is expected to come in within the forecast range of 1.5 per cent to 2.5 per cent this year. Similarly, headline inflation is currently projected to pick up to 1 per cent to 2 per cent this year as the overall drag from accommodation and private road transport costs lessens.

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