Core inflation at 2.9% in June as prices retail, travel prices ease

Private transportation prices declined by 0.7% during the month.

Singapore’s core inflation eased to 2.9% in June, according to data from the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS). This is slightly lower than an earlier analyst estimate that Singapore's core inflation will hover above 3% for the rest of 2024.

Lower inflation for retail and other goods, as well as services, contributed to the decline.

On a month-on-month basis, core consumer price index (CPI) was unchanged.

CPI-All Items also grew slower at 2.4% in June compared to 3.1% in May. This was due to a decline in private transport costs, as well as lower inflation for retail & other goods, services, and accommodation, the MTI and MAS said in a press release.

Private transport costs contracted 0.7% thanks to the prices of cars and motorcycles declining. Petrol prices also rose at a slower pace, authorities said.

The prices of retail & other goods grew only 0.5% in June compared to a 1.5% increase in May. The prices of medicines & health products, and personal effect items, recorded slower increases in June. Prices of clothing & footwear fell more steeply, MTI and MAS said.

Services inflation rose 3.4% in June, with the cost of hospital services and holiday expenses rising at a slower pace compared to May.

Accommodation inflation rose at almost the exact same pace in June (3.3% inflation vs 3.4% in May), with authorities noting that housing rents rose at “a more modest pace.”

Food inflation was broadly unchanged, as is electricity & gas inflation.

In the future, authorities expect the prices of energy and most food commodities to remain stable, reflecting global trends.

Travel expenses should also moderate, the MTI and MAS said.

“Inflation of services associated with overseas travel should moderate further over the course of the year, as the air transport and hospitality sectors around the world restore supply,” MAS and MTI said in its June report on Singapore’s inflation.

The gradual strengthening of the Singapore dollar trade-weighted exchange is also expected to temper the Lion City’s imported inflation for the months ahead.

However, businesses in Singapore are likely to “continue passing through the earlier increases in labour and other business costs to consumer prices, albeit at a reduced pace.”

Private transport inflation and accommodation inflation are expected to continue easing.

For the whole year, authorities expect core inflation to average between 2.5% to as high as 3.5%.

MTI and MAS warned against risks, however, including fresh geopolitical shocks, adverse weather events, and renewed transportation disurptions around the world. These could reportedly put upward pressure on global energy and food commodity prices, as well as shipping costs.