Singapore’s core inflation in October eases to 5.1%, MAS and MTI stick to outlook

SINGAPORE’S inflation unexpectedly eased across the board in October, from decade-high levels in the previous month, as prices rose more slowly across almost all broad categories, data from the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) showed on Wednesday (Nov 23).

Headline inflation fell to 6.7 per cent year on year in October, from 7.5 per cent previously, with most categories seeing lower price increases other than accommodation and food, the authorities said.

Core inflation, which excludes accommodation and private transport, was 5.1 per cent year on year last month, easing from September’s 5.3 per cent. The authorities said this was driven by smaller increases in the prices of electricity and gas, retail and other goods and services.

Both sets of figures are lower than what private-sector economists polled by Bloomberg have predicted; they were expecting headline inflation to come in at 7 per cent, and core inflation at 5.3 per cent.

It is also the first time both figures have dipped since February this year.

Still, MAS and MTI kept their inflation outlook the same as the previous month and is sticking to a full-year forecast of 6 per cent for headline inflation and 4 per cent for core inflation. They are also maintaining their outlook at 5.5 to 6.5 per cent for headline inflation, and 3.5 to 4.5 per cent for core inflation.

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Specifically, private transport inflation dropped to 17.3 per cent in October, from 22.3 per cent the previous month, due to the slower pace of increase in car and petrol prices.

Electricity and gas inflation also fell to 19 per cent, from 23.9 per cent in September, as a result of smaller increases in electricity and gas tariffs.

Inflation for retail and other goods eased to 2.6 per cent in October, from the previous month’s 3.1 per cent, as the prices of clothing and footwear as well as other personal care products rose at a slower pace.

Services inflation dipped to 3.9 per cent, from September’s 4 per cent, with holiday expenses and recreational and cultural services costs seeing smaller increases.

Bucking the trend was food prices, which saw inflation edged up to 7.1 per cent in October, from 6.9 per cent previously.

Accommodation inflation was flat at 4.9 per cent, with the pace of increase in housing rents holding steady.

Maybank economists Chua Hak Bin and Lee Ju Ye believe inflation “may have peaked but will remain elevated in the first half of 2023”, with the tight labour market. The duo are keeping their 2022 full-year outlook at 6.2 per cent for headline inflation and 4.2 per cent for core inflation.

Barclays regional economist Brian Tan downgraded his 2022 full-year outlook by 0.1 percentage point to 4.1 per cent for core inflation and 6.1 per cent for headline inflation.