Singapore core inflation picks up to 2.2% in August on higher services, retail and food costs

[SINGAPORE] Consumer prices continued their upward creep in August, as core inflation rose to 2.2 per cent from 2 per cent in July, according to figures released on Wednesday (Sep 23).

The increase in prices – which was in line with the median estimate in a private Bloomberg poll – came on the back of price hikes in services, retail and other goods, and food.

Meanwhile, headline inflation – which includes accommodation and private transport costs – hit 2.3 per cent in August, up from 2.2 per cent in the month prior.

Higher global energy prices have bumped up electricity and gas tariffs and transport fares here, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) reiterated in their joint statement, while prices of a wider range of imports “are expected to pick up in the quarters ahead” as well.

Electricity and gas prices rose by 8.7 per cent year on year in August, the same as in July, while food services costs nudged food inflation up to 2.3 per cent from 2.2 per cent.

Retail and other goods saw prices jump by 1.8 per cent, faster than the 1.4 per cent growth in July, on pricier clothes, shoes and personal care products.

In the services segment, prices were up by 2 per cent year on year in August, compared with 1.7 per cent a month earlier, on faster increases in airline and point-to-point transport fares.

Inflation in accommodation stood at 0.8 per cent, unchanged from the previous month, on a consistent pace of increase in housing rents.

Meanwhile, private transport inflation cooled to 7.5 per cent, from 8 per cent in July, as car prices increased by a smaller amount.

SEE ALSO

One-third of Singapore-listed firms at risk in severe AI downturn: MAS

Tightening monetary policy by Fed a test for Singapore’s Reits, market revitalisation project

When the Fed hikes in an oil shock: What investors should do now

MAS and MTI held to their forecast for both core and headline inflation to average between 1.5 and 2.5 per cent for the full year, with core inflation tipped to stay high “before moderating more discernibly from around mid-2027”.

Inflation for August came in stronger than expected in other parts of the region as well.

Consumer prices rose by 1.9 per cent year on year in Malaysia, 2.5 per cent in Thailand, 3.2 per cent in Indonesia and 4.9 per cent in Vietnam, according to the latest prints.

Still, OCBC economists remarked in a note on Sep 15 that higher oil prices have so far had a limited pass-through effect on consumer prices in South-east Asia.

Interventions such as fuel subsidies and price controls have kept inflation in check, even as they transfer the burden onto fiscal balances and external accounts, the economists noted.

Central bank watchers have so far been cautious on the risk of MAS tightening monetary policy in October, even after the US Federal Reserve raised interest rates in mid-September – especially as the local labour market is showing continued signs of softness.