January inflation eases to 2.9%, a step back from December’s 3.7%

SINGAPORE: The pace of price hikes took a bit of a breather as January inflation eased to 2.9% year-on-year (YoY). That’s a step back from December 2023, when the inflation rate was at 3.7%, Singapore Business Review reports.

The recent figures, as per data from the Department of Statistics (SingStat), paint a picture of a slightly more relaxed scene on the price front.

Breaking it down further, the Consumer Price Index (CPI) for all items experienced a gentle decline of 0.7% month-on-month (MoM) in December 2023. This smaller expansion in the CPI can be pinned on a few factors.

Core inflation, for instance, dipped from 3.3% YoY in December 2023 to 3.1% YoY in January.

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

This was mirrored in accommodation and private transport inflation, which saw rates dropping from 4.1% YoY to 2.1% YoY and 5.0% YoY to 2.9% YoY, respectively.

Services and food saw a dip in the rate of price increases, marking 3.3% YoY (down from 3.9% YoY) and 3.3% YoY (down from 3.7% YoY), respectively.

Not all sectors experienced a slowdown, though. Retail and other goods, along with electricity and gas, saw quicker price movements in January, clocking in at 1.4% YoY (up from 1.1% YoY) and 5.3% YoY (up from 1.3% YoY), respectively.

The Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) reckon that core inflation might ramp up again in February, thanks to the Chinese New Year.

However, they stated that “core inflation should 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.”

Looking ahead, the MTI and MAS are expecting headline and core inflation to hover between 2.5% and 3.5%.

However, if we strip away the temporary impacts of the 1%-point GST rate hike to 9%, they anticipate a more subdued rate, ranging from 1.5% to 2.5%.

So, while the recent dip in inflation might bring a bit of relief, it’s clear that the year ahead could still hold its share of twists and turns in the price game. /TISG

Read related: Inflation picked up to 3.7% in December 2023