23-8-2023 (SINGAPORE) Singapore witnessed a continued decline in core inflation, reaching a year-on-year low of 3.8% in July, according to the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore. This drop from June’s 4.2% was primarily attributed to a smaller increase in food prices and a decrease in electricity and gas costs. The last time core inflation was below 3.8% was in May 2022 when it stood at 3.6%.
Core inflation had surged to a 14-year high of 5.5% in January and February this year before steadily trending downwards in subsequent months. Core inflation excludes accommodation and private transport expenses from its calculations.
Overall inflation for July also experienced a decline, falling to 4.1% on a year-on-year basis compared to the previous month’s 4.5%.
The MTI and MAS stated that this reduction was influenced by lower private transport inflation as well as the decrease in core inflation. They anticipate further moderation in core inflation in the coming months due to the sustained low levels of imported costs compared to the previous year and an expected easing of tightness in the domestic labour market.
Looking ahead to 2023, headline inflation is projected to average between 4.5% and 5.5%, while core inflation is expected to range from 3.5% to 4.5%. Excluding the transitory effects of the one percentage point increase in the Goods and Services Tax (GST), headline inflation is anticipated to be between 3.5% and 4.5%, and core inflation between 2.5% and 3.5%.
The MAS and MTI cautioned that there are still upside risks, including the potential for fresh shocks in global food commodity prices and a persistently tight domestic labour market. Conversely, there are also downside risks, such as a more pronounced than projected slowdown in the global economy, which could lead to a general easing of inflationary pressures.
