25-7-2023 (SINGAPORE) Inflation in Singapore has continued to cool for the second consecutive month, with the Government lowering its forecast for overall inflation for 2023. Prices of food, services, and private transport have risen at a slower pace, leading private economists to believe that core inflation could drop to 3% or lower for the full year if the trend persists.
Core inflation, which excludes private transport and accommodation costs, fell to 4.2% year-on-year in June, down from 4.7% the previous month, its lowest level since mid-2022. Meanwhile, headline inflation, or the overall consumer price index, also eased to 4.5%, down from 5.1% in May.
The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) have lowered their forecast for overall inflation for the year to between 4.5% and 5.5%, from 5.5% to 6.5% previously, while core inflation estimates remain between 3.5% and 4.5%.
MAS and MTI have stated that core inflation is expected to moderate further in the second half of 2023, as imported costs fall from year-ago levels and the current tightness in the domestic labour market eases.
Private transport inflation fell to 5.8% in June, down from 7.2% in May, while food inflation eased to 5.9% from 6.8% in May. Services inflation edged down to 3.6% from 3.9% the previous month, and accommodation inflation dipped to 4.5%. Inflation for retail and other goods declined to 2.7%, while electricity and gas inflation eased to 3.1%.
Private economists have welcomed the easing of inflation, which they believe is a positive affirmation of the MAS’s decision to pause tightening of monetary policy back in April.
