Singapore inflation cooled to 4.2% in June, lowest level in a year

SINGAPORE: The core inflation rate in Singapore rose 4.2 per cent year-on-year in June, said a joint statement from the Monetary Authority of Singapore and the Ministry of Trade and Industry on Monday (Jul 24).

This showed an easing from the 4.7 per cent rate in May and matched the forecast made by economists. It is also the lowest inflation rate in the country since the middle of 2022.

Lower prices of food and energy contributed to the lower inflation rate as well, the statement said, as “Global supply chain frictions, energy and food commodity prices have moderated.

Consumer price inflation in Singapore’s major trading partners have also been on an easing trend. As a result, prices of Singapore’s imported goods continue to decline in year-on-year terms.”

It is the second month in a row that inflation has eased in Singapore. Should this trend last, the country’s core inflation rate for the year could decrease to 3 per cent or even less, The Straits Times quotes private economists as saying.

Core inflation excludes private transport and accommodation costs, while headline inflation is the overall consumer price index.  Headline inflation was 5.1 per cent in May but dropped to 4.5 per cent in June.

MAS and MTI added, “Taking into account all factors, MAS Core Inflation is expected to moderate further in H2 2023 as imported costs fall from year-ago levels and the current tightness in the domestic labour market eases.”

Moreover, private transport and accommodation inflation are also expected to moderate this year due to the increased supply of housing and COE quota.

“For 2023 as a whole, headline and core inflation are 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,” the statement added.

Nevertheless, risks remain, “including from fresh shocks to global commodity prices and more persistent-than-expected tightness in the domestic labour market.”

But if the downturn in advanced economies is sharper than expected, this could bring about a general easing of inflationary pressures, the statement added. /TISG

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