SINGAPORE – Singapore’s core inflation eased more than expected in March as prices of food and services rose at a slower place, with overall inflation dropping to a 2½-year low.
Core inflation – which excludes private accommodation and transport costs to better represent the expenses of Singapore households – fell to 3.1 per hundred year on year in March. This was after Chinese New Year prices sent core inflation jumping to 3.6 per cent in February, from 3.1 per cent in January.
Compared to February, core inflation dropped 0.2 per cent, the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) said in their joint report.
Overall inflation slowed year on year to 2.7 per cent, from 3.4 per cent in February. This is the lowest since September 2021. The slowdown was largely due to a decline in private transport costs, in addition to lower core inflation.
Month on month, overall inflation dipped 0.1 per cent.
Both inflation indicators came in well below market forecasts. Analysts polled by Bloomberg had tipped core inflation to come in at 3.5 per cent and overall inflation at 3.1 per cent.
Dr Chua Hak Bin, economist at Maybank, noted that there was no discernible Taylor Swift shock to prices as airfares fell and holiday expenses rose at a slower pace. Retail and other goods inflation also eased.
American singer and songwriter Taylor Swift held The Eras Tour concerts in Singapore over six nights from March 2 to 9, serenading more than 300,000 fans, including those from overseas.
“Core inflation has resumed its gradual downward trend after the blip during the festive Lunar New Year month. We expect core inflation to drift down towards 2.5 per cent by the fourth quarter, opening the door for MAS to ease policy at the October meeting,” the economist said.
Earlier in April, MAS kept unchanged its monetary policy stance aimed at strengthening the trade-weighted Singapore dollar to combat inflationary pressures.
In March, private transport costs fell as car prices declined in tandem with lower premiums for certificate of entitlements (COE). Anyone who wishes to register for a new vehicle in Singapore must first obtain a COE.
Food inflation eased, mainly due to a smaller increase in the prices of non-cooked food, while services inflation moderated as airfares fell and holiday expenses rose at a slower pace.
Retail and other goods inflation eased due to a decline in the prices of clothing and footwear, and a more modest rate of increase in the prices of alcoholic drinks and tobacco.
Accommodation inflation edged down due to a smaller increase in housing rents. Electricity and gas inflation eased as electricity costs rose at a more moderate pace.
MTI and MAS maintained their estimates for both core and overall inflation in 2024 at 2.5 per cent to 3.5 per cent.
Excluding the transitory effects of the 1 percentage point increase in the goods and services tax rate to 9 per cent, overall and core inflation are expected to come in at 1.5 per cent to 2.5 per cent.
Core inflation is expected to stay on a gradual moderating trend over the rest of the year as import cost pressures continue to decline and tightness in the domestic labor market eases, they said.
Although crude oil prices have risen in recent weeks, global prices for most food commodities, as well as intermediate and final manufactured goods, have continued to decline, they added.
