Singapore’s headline inflation averages 4.8% in 2023, core inflation at 4.2%

SINGAPORE’S inflation in 2023 came close to official forecasts, with slightly higher-than-expected inflation in December, data from the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) showed on Tuesday (Jan 23).

Headline inflation last year was 4.8 per cent year on year, against MAS and MTI’s forecast of “around 5 per cent”. Similarly, 2023 full-year core inflation – which excludes accommodation and private transport – at 4.2 per cent was close to the official forecast of “around 4 per cent”. Headline inflation in 2022 averaged 6.1 per cent, while core inflation was 4.1 per cent.

“In 2023, inflation rates were impacted by the increase in the GST (goods and services tax) rate to 8 per cent,” the authorities added.

In December, headline and core inflation inched up sequentially, instead of falling marginally as expected.

Headline inflation came in at 3.7 per cent, up from 3.6 per cent in November and the Bloomberg median estimate of 3.5 per cent. This reflected a faster pace of increase in private transport costs, alongside the pickup in services inflation.

Core inflation, at 3.3 per cent in December, was higher than the preceding month’s 3.2 per cent and Bloomberg’s median economist forecast of 3 per cent. This rise was mainly due to higher services inflation.

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In their inflation outlook, MAS and MTI noted global crude oil prices fell in Q4, and now expect them to stabilise at around current levels.

“Prices of services associated with overseas leisure travel are also expected to moderate over the course of 2024, as supply conditions in international hospitality industries improve,” they added.

While they maintained that core inflation will likely be affected by the GST rate increase in early 2024, the authorities also noted the impact of increases of “administrative prices”.

Still, MAS and MTI predict a “gradual moderating trend” in core inflation over 2024. Core inflation is projected to average 2.5 to 3.5 per cent, unchanged from the previously announced estimate.

The forecast range for headline inflation will now be updated in the upcoming January Monetary Policy Statement, they said. It was previously predicted to come in at 3 to 4 per cent for 2024.

On a month-on-month basis, headline inflation was 0.4 per cent and core inflation was 0.6 per cent, mainly accounting for higher services costs.

Key CPI categories

Inflation was mixed across categories in December.

Services inflation grew to 3.9 per cent in December, from 3.5 per cent in the preceding month, as holiday expenses rose at a faster pace. Meanwhile, airfares posted a smaller decline. Point-to-point transport services fees and bus and train fares also increased to a larger extent. 

Private transport inflation recorded growth, to 5 per cent from 4.2 per cent in November, due to larger increases in the prices of cars and petrol.

For retail and other goods, inflation edged up to 1.1 per cent from 1 per cent, as the cost of household durables rose, and the prices of personal care goods increased more sharply.

However, accommodation inflation remained unchanged at 4.1 per cent, as housing rents rose at a steady pace.

Electricity and gas inflation, in contrast, eased to 1.3 per cent from 1.5 per cent in November, alongside a smaller increase in electricity costs.

On the bread and butter front, food inflation came in lower at 3.7 per cent, compared with 4 per cent previously, as the prices of non-cooked food rose at a more gradual pace.