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Singapore's core inflation up 1.5% in October, biggest rise in nearly 3 years

Singapore's core inflation up 1.5% in October, biggest rise in nearly 3 years
People shopping for produce in Singapore. (Photo: AFP/Roslan Rahman)

SINGAPORE: Singapore's core inflation in October rose to its highest in nearly three years on the back of rising food and services prices.

Official data released on Tuesday (Nov 23) showed that core inflation - which excludes accommodation and private transport costs - went up to 1.5 per cent year-on-year, an increase from the 1.2 per cent in September

A Reuters poll of economists had forecast an increase of 1.3 per cent.

Meanwhile, the headline consumer price index, or overall inflation, jumped to 3.2 per cent year-on-year in October - compared with 2.5 per cent in the previous month - also beating the forecast of 2.8 per cent. 

Providing the figures in a joint release, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said the increase reflected stronger private transport and accommodation inflation, on top of the higher core inflation.

PRICES OF SERVICES AND FOOD GO UP

Food inflation rose to 1.7 per cent in October, up from 1.6 per cent in September. This was largely due to the increase in prices of non-cooked food, with inflation of prepared meals mostly flat.

Higher inflation for airfares and holiday expenses led to an increase in the pace of services inflation - from 1.2 per cent in September to 1.6 per cent in October. Tuition and other fees, as well as prices of recreational and cultural services, also saw larger increases.

Car prices, which were affected by the rise in COE premiums, saw strong increases, which led to a sharp rise in private transport costs. Inflation in this category jumped to 14.3 per cent year-on-year in October, compared to 10.8 per cent the month before.

Housing rents also went up, which had an impact on accommodation inflation, going from 1.9 per cent in September to 2.5 per cent in October.

INFLATION OUTLOOK

MAS and MTI projected a steady increase in core inflation in the quarters ahead due to rising imported and labour costs, coupled with the recovery in domestic economic activity.

The projection for core inflation in 2021 as a whole remained unchanged - near the upper end of the 0 to 1 per cent forecast range this year, with a further increase to 1 to 2 per cent in 2022.

Overall inflation is expected to come in around 2 per cent this year and average 1.5 to 2.5 per cent next year. 

"Amid construction delays, accommodation inflation should remain firm and continue to support CPI-All Items inflation in 2022," said MAS and MTI.

Private transport inflation, however, is projected to "likely moderate" next year as authorities predicted a slower pace of increase in COE premiums and petrol costs.

The global outlook for inflation stayed unchanged from the previous month, with inflation remaining elevated and "likely to persist for some time", said MAS and MTI.

"Notably, higher crude oil prices are supported by tight supply conditions, as well as strengthening demand," noted MAS and MTI.

"The supply-demand mismatch in various commodities and goods markets, as well as bottlenecks  in global transportation, are likely to continue in the near term."

Source: CNA/ac(gs)

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