Singapore's core inflation edges up to 1.9% year-on-year in October

Singapore's core inflation edges up to 1.9% year-on-year in October

SINGAPORE: Singapore's core inflation edged up to 1.9 per cent year-on-year in October from 1.8 per cent the previous month, according to the latest figures released on Friday (Nov 23).

A larger increase in the cost of electricity and gas more than offset lower food and retail inflation, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a press release.

The core inflation measure excludes changes in the price of cars and accommodation.

Headline inflation remained at 0.7 per cent year-on-year in October, unchanged from September, due to a steeper decline in private road transport costs which offset the stronger pick up in the cost of electricity and gas.

The cost of electricity and gas increased by 16.6 per cent year-on-year in October, compared to the 13 per cent rise in September.

This was due to the upward revision in electricity tariffs, on the back of higher oil prices in the preceding months, said MAS and MTI.

The overall cost of retail items rose by 1.3 per cent year-on-year, easing from the 1.5 per cent increase the previous month. 

This mostly reflected lower inflation for clothing and footwear items as well as personal effects and medical products, which outweighed a smaller drop in the prices of telecommunications equipment as well as an increase in the prices of household durables after several months of decline, said MAS and MTI.

In October, food inflation edged down to 1.4 per cent from 1.6 per cent in the preceding month, reflecting smaller price increases for both non-cooked food items and prepared meals.

Meanwhile, services inflation for October came in at 1.4 per cent, unchanged from the previous month.

This was because a larger pickup in education services fees and holiday expenses, as well as a smaller decline in telecommunication services fees, were offset by a slower pace of increase in recreational and domestic services fees and airfares.

Private road transport costs fell by 0.6 per cent, steeper than the 0.1 per cent decline in September. 

This was mainly due to a larger fall in car prices, which outweighed a faster pace of increase in petrol prices.

Accommodation costs fell by 2.5 per cent in October, the same rate of decline as in September, as a smaller increase in the cost of housing maintenance and repairs offset a more gradual fall in housing rentals.

Looking ahead, MAS and MTI said that inflation for non-core components of the Consumer Price Index (CPI) is expected to increase in 2019.

"Private road transport costs are expected to rise due to higher COE premiums amid an anticipated tapering in supply, while imputed rentals on owner-occupied accommodation will fall by a lesser extent than in 2018 as rental demand gradually picks up," they said.

Meanwhile, an improving labour market should underpin a faster pace of wage growth in 2018 and 2019, said MAS and MTI.

"Growth in the unit labour cost for services has picked up recently. As domestic demand strengthens further, there could be a greater pass-through of higher import and labour costs to consumer prices," they said. 

"However, the extent of overall price increases will be capped by greater market competition in several consumer segments, such as telecommunications, electricity and retail."

MAS expects core inflation to rise modestly in the months ahead and come in at the forecast range of 1.5 per cent to 2 per cent this year and between 1.5 per cent and 2.5 per cent in 2019.

CPI-All Items inflation is projected to be about 0.5 per cent this year, before picking up to 1 per cent to 2 per cent next year.

Source: CNA/nc(ms)