Singapore’s May inflation meets economists’ expectations; headline and core figures at 3.1%
Some broad CPI categories experienced higher inflation, while others eased
SINGAPORE’S inflation in May met economists’ expectations, with headline inflation rising at a faster pace than the month before, data from the Department of Statistics showed on Monday (Jun 24).
May’s headline inflation was 3.1 per cent, up from 2.7 per cent in April and in line with the median forecast by private-sector economists polled by Bloomberg.
This was driven by higher private transport inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).
Core inflation, which excludes accommodation and private transport, was 3.1 per cent – unchanged from April – meeting economists’ median estimates.
On a month-on-month basis, the overall consumer price index (CPI) rose 0.7 per cent in May, while the core CPI marginally increased by 0.1 per cent.
Monday’s inflation prints – the final release before MAS’ next monetary policy review in July – prompted economists to predict that the central bank will not tweak its policy settings.
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“Similar to the Federal Reserve, sticky and elevated core inflation remains the primary concern of MAS,” said HSBC Asean economist Yun Liu.
“As such, we do not expect MAS to move anytime soon this year.”
OCBC chief economist Selena Ling concurred. “For MAS, the bar to a further monetary policy tightening is relatively high, while the time for an easing may also be some time away given the downward sticky core inflation prints.
“Our baseline view is no change to MAS’ monetary policy stance for the July meeting and (likely) the October meeting as well,” she said.
RHB acting group chief economist Barnabas Gan also anticipates that MAS will maintain its current monetary policy parameters throughout the year.
“The caveat to our expectations for MAS to stay its hand this year will centre on an unexpected surge in global inflation, whereby should that scenario occur, we think the balance of risk is tilted towards a policy tightening by MAS in the quarters ahead,” he said.
MAS and MTI maintained their full-year inflation forecasts, with both headline and core inflation expected to average between 2.5 and 3.5 per cent. Excluding the transitory effects of the goods and services tax hike, both headline and core inflation are expected to be between 1.5 and 2.5 per cent.
In May, some broad CPI categories experienced higher inflation, while others eased.
Private transport costs ticked up by 2.8 per cent year on year, accelerating from a 0.3 per cent rise the previous month, as car and motorcycle prices rose and petrol prices gained at a faster pace.
Accommodation inflation eased to 3.4 per cent, from 3.5 per cent previously, on account of smaller increases in housing rents.
For core inflation components, electricity and gas inflation rose the most at 6.9 per cent, though it registered a fall from April’s 7.6 per cent rise as electricity prices posted a smaller increase.
Food inflation remained unchanged at 2.8 per cent, “reflecting stable food services inflation, even as non-cooked food inflation registered a modest increase”, MTI and MAS said.
Retail and other goods inflation eased to 1.5 per cent, from 1.6 per cent in April, due to a slower pace of increase in prices of personal effects, as well as alcoholic beverages and tobacco.
In contrast, services inflation edged up to 3.6 per cent, from 3.5 per cent previously, on the back of a larger increase in holiday expenses and a smaller decline in airfares.
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