Singapore core inflation dips to 3.2% in November in return to slower price increases

SINGAPORE – Both core and overall consumer inflation edged down in November, on the back of a slower rise in the prices of retail goods, food, electricity, gas and transport.

Official data on Dec 26 showed that core inflation, which excludes private transport and accommodation costs to better reflect the expenses of households here, came in at 3.2 per cent year on year in November, matching a Bloomberg poll of economists.

This is a touch lower than the 3.3 per cent in October, when core consumer prices had picked up after rising at a slower pace for several months.

Overall or headline inflation in November eased to 3.6 per cent year on year, from 4.7 per cent in October, largely due to lower private transport inflation.

On a month-on-month basis, which represents how much momentum there still is in prices, core consumer prices crept up 0.1 per cent in November on account of higher costs of food and services.

However, headline inflation dipped by 0.2 per cent month on month, mainly due to a fall in private transport costs.

The Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) said on Dec 26 that core inflation is expected to remain around current levels and come in at the upper end of the 2.5 per cent to 3 per cent range at the year end.

They said core inflation is expected to go up in early 2024, as the goods and services tax is raised from 8 per cent in 2023 to 9 per cent in 2024. 

However, core inflation should resume a broadly moderating trend over the course of 2024, as import cost pressures decline and tightness in the domestic labour market continues to ease, said MTI and MAS.

They reiterated that headline inflation is expected to average around 5 per cent for full-year 2023, and core inflation to be 4 per cent.

In 2024, headline inflation is projected to average 3 per cent to 4 per cent, with core inflation forecast at 2.5 per cent to 3.5 per cent.

Services inflation was the only category that bucked the downward trend, edging up to 3.5 per cent year on year in November from 3.4 per cent in October. This was due to the costs of outpatient, recreational, cultural and telecommunication services rising at a faster pace.

Private transport inflation recorded the steepest decline among categories in November, falling to 4.2 per cent from 11.7 per cent in October as car prices rose at a much slower pace.

Inflation for retail and other goods fell to 1 per cent in November from 1.6 per cent the previous month, largely owing to a decline in the prices of medical goods and household durables.

A smaller increase in electricity costs meant that inflation for electricity and gas dipped to 1.5 per cent from 1.8 per cent in October.

Food and accommodation inflation both edged down, to 4 per cent and 4.1 per cent respectively.

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