Inflation smashes seven-year high to hit 2.1% in April

Transport costs accelerated much of the national price index, increasing by 9.7% year-on-year.

Inflation careened to 2.1% in April, the highest reading since mid-2014.

Leading the charge was transport costs, which increased at a 9.7% pace. This was followed by a 1.2% growth in the prices of household durables and services , and 1.0% inflation for each of the education and food divisions.

Meanwhile prices of clothing and footwear deflated by 4.9%, while prices in the communication and miscellaneous goods divisions deflated by 0.3% each.

Core inflation ticked up by a slight 0.6% year-on-year.

“The low base effect was at work in pushing total inflation higher in the last month. But that’s not all,” said Prakash Sakpal, Senior Economist, Asia at ING.

Sakpal added that the quarter ly adjustment to electricity tarrifs, which hiked by 8.6% in the second quarter of 2021, and rising transportation costs and gasoline prices also contributed to the inflation spike.

“Singapore saw a persistent deflation environment in the period between April and November 2020, on the back of a relatively weaker economic environment and low oil prices then. As such, the rise of consumer prices may continue to be observed in the months ahead, although it is expected to be transient when the base effects eventually dissipate, ” said UOB economist Barnabas Gan.

Gan added that the risk for inflation in 2021 is balanced, as upward pressures from potential higher global oil prices may be dampened by the government’s decision to announce a Phase Two (Heightened Alert, which elevated economic uncertainties and diminished consumer sentiment.