Singapore: According to official data on Monday (October 25), consumer prices in Singapore continued to rise in September, partly due to higher food and electricity and natural gas prices.
Core inflation-excluding accommodation and private transportation costs-rose slightly to 1.2% year-on-year, up from 1.1% in August.
At the same time, according to data from the Monetary Authority of Singapore (MAS) and the Ministry of Trade, the headline consumer price index or headline inflation rate rose slightly to 2.5% in September from 2.4% in August. And Industry (MTI).
MAS and MTI stated that this reflects higher inflation in accommodation and food.
Food prices, electricity and natural gas prices are rising
The food inflation rate in September rose to 1.6% from 1.5% in August, because the prices of non-cooked and prepared foods rose slightly.
Electricity and natural gas prices rose even more sharply, from 9.7% in August to 9.9%. MAS and MTI stated that this was due to the larger increase in the average electricity price paid by households under the open electricity market.
The cost of retail and other commodities remained negative, declining by 1.1% at the same rate. The authorities stated that the smaller declines in the prices of clothing and footwear were largely offset by lower inflation rates for personal items and larger declines in the prices of non-durable household items.
Accommodation increases, private transportation remains unchanged
Accommodation prices in September rose to 1.9% from 1.7% in August. MAS and MTI stated that this is due to the faster increase in housing rents.
As the rate of increase in car prices is similar to that in August, the private transport inflation rate remains unchanged at 10.8%. The authorities stated that the strong increase in motorcycle prices was offset by sharp declines in other private transportation costs.
Service costs also remained stable at 1.2%. MAS and MTI attributed this to increased inflation in holiday expenses and hospital services, but it was offset by falling inflation in point-to-point transportation services and entertainment and cultural services.
Inflation outlook
MAS and MTI expect that in the context of rising import and labor costs and the recovery of domestic economic activity, core inflation will rise steadily in the next few quarters.
The authorities stated that core inflation-a key policy consideration for the central bank-will approach the upper limit of the 0% to 1% forecast range this year, and will further rise to 1% to 2% in 2022.
It is estimated that the overall inflation rate this year will be about 2%, and will average 1.5% to 2.5% next year.
In the case of construction delays, accommodation inflation should “stay firm” and continue to support overall inflation in 2022.
The authorities said that due to the slowdown in COE premiums and gasoline costs, private transportation inflation may slow down next year.
MAS and MTI stated that as Singapore transitions to managing COVID-19 as a local regulation, the recovery of the domestic labor market should continue.
They added that as the weakness in the labor market dissipated, wages have rebounded and are expected to “steadily rise.”
The authorities expect that consumer demand should increase, so that the accumulated business costs will be more passed on to consumer prices.
MAS and MTI stated that as for global inflation, this is still “rising” and may continue for some time.
“Due to OPEC+’s decision to maintain moderate supply growth, crude oil prices have recently risen, and as global natural gas prices have risen, demand for oil has also rebounded.”
They added that the mismatch between supply and demand in various commodities and commodity markets and the “bottleneck” of global transportation may continue to exist in the short term.
They also expect that as the global and regional recovery progresses, potential inflation of Singapore’s major trading partners will gradually rise.
