Singapore inflation rises to 3.4% in February, higher than expected

SINGAPORE: The country’s central bank, the Monetary Authority of Singapore (MAS), released its Consumer Price Developments in February 2024, showing that inflation increased more than expected last month.

Headline inflation, which measures total inflation within an economy, decreased to 2.9 per cent in January from 3.7 per cent in December.

Core inflation, which takes into account all commodities, goods, and services except for food and fuel, fell to 3.1 per cent last month, despite the increase in Goods & Services Tax from 8 to 9 per cent on Jan 1. In December, it had been at 3.3 per cent.

MAS’ latest report shows that headline inflation increased to 3.4 per cent year-on-year in February, while core inflation rose to 3.6 per cent.

“This was driven by higher services and food inflation, partly reflecting seasonal effects associated with the Chinese New Year,” MAS said in a March 25 (Monday) joint release with the Ministry of Trade and Industry.

Inflation has increased in accommodation as additional Service & Conservancy Charges (S&CC) rebates were not disbursed in February, unlike the previous month.

Meanwhile, more expensive airfares and a steeper rise in holiday expenses contributed to service inflation. Food inflation also increased, with the prices of cooked and non-cooked food increasing faster.

On the other hand, electricity and gas, retail and other goods, and private transport inflation have all declined. This is due to a slower pace of increase in electricity costs, alcoholic drinks and tobacco, car prices, and lower COE premiums, respectively.

MAS and MTI observed that the prices for most food commodities and manufactured goods have declined worldwide even as crude oil prices have increased recently.

The agencies added that they expect inflation for overseas leisure travel to moderate over the year.

“Core inflation is expected to resume a gradual moderating trend over the rest of the year as import cost pressures continue to decline and tightness in the domestic labour market eases.

Amid the larger projected COE supply this year, private transport inflation is expected to be lower as compared to last year. Accommodation inflation should also continue to ease as the supply of housing units available for rental increases over the course of the year,” MAS and MTI wrote.

They added that headline and core inflation are projected to average between 2.5 and 3.5 per cent for 2024 as a whole. /TISG

Read also: Despite GST hike, core inflation fell to 3.1% in January