Core inflation in S'pore hits 3.6% in May 2022, highest in 13.5 years

Private transport inflation rose to 18.5 per cent in May.

Belmont Lay | June 23, 2022, 04:54 PM

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Singapore’s core inflation in May came in at 3.6 per cent year-on-year -- the highest level in more than 13 years.

This was up from a previous 10-year high of 3.3 per cent in April, official data [PDF] released on June 23 by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) showed.

The core inflation, which excludes accommodation and private transport costs, is led by rising prices of food and utilities.

The last time Singapore experienced a higher year-on-year core inflation was in December 2008, when it hit 4.2 per cent.

Overall inflation rose to 5.6 per cent year-on-year in May.

Also known as the headline consumer price index, overall inflation exceeded the 5.4 per cent reported in both April and March.

Food inflation

Food inflation hit 4.5 per cent in May compared to 4.1 per cent in April due to a sharper rise in the price of food services.

Private transport inflation

Private transport inflation rose to 18.5 per cent in May from 18.3 per cent in April due to increases in petrol costs stemming from higher global oil prices.

Energy inflation

Electricity and gas prices have also gone up with inflation at 19.9 per cent in May compared to 19.7 per cent in April due to the increase in average prices of electricity plans offered by Open Electricity Market (OEM) retailers going up at a faster pace.

Retail goods inflation

Inflation for retail and other goods was at 1.8 per cent in May, up from 1.6 per cent in April, due to increase in prices of clothing and footwear, personal effects and personal care products.

Services inflation

Prices of services rose 2.6 per cent in May from 2.5 per cent in April due to an increase in the costs of holiday expenses and point-to-point transport services.

Accommodation inflation

Accommodation inflation rose to 4 per cent in May from 3.9 per cent in April due to a larger increase in housing rents.

Inflationary pressures still strong

MAS and MTI said core inflation is predicted to go up further in the next few months, but is expected to moderate towards the end of the year.

External inflationary pressures continue to be strong amid elevated global commodity prices, as well as ongoing supply chain frictions, they added, while crude oil prices remain elevated in the near term due to heightened geopolitical risks and tight supply conditions.

Supply-demand mismatches and disruptions to global transportation and regional supply chains will keep food and commodities prices up, they said.

The labour market "will support a firm pace of wage increases” and is expected to “remain tight".

Accumulating business costs being passed to consumer prices is likely to occur to keep core inflation significantly above its historical average through the year, MAS and MTI also said.

Headline inflation

Headline inflation will pick up by more than core inflation this year, due to private transport and accommodation inflation expected to stay firm in the near term, MAS and MTI said.

For the whole of 2022, headline inflation is forecast to be between 4.5 per cent and 5.5 per cent, while core inflation is projected to be between 2.5 per cent and 3.5 per cent.

The government announced on June 21 a S$1.5 billion support package for lower-income and more vulnerable groups to counter rising inflation.

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