Singapore's inflation rate rose to 0.4% in May

This was due to a faster pace of price increases across all the major categories.

Singapore's headline inflation rate rose to 0.4 per cent in May compared to the 0.1 per cent recorded in April, according to the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) on Monday (Jun 25).

This was due to a faster pace of price increases across all the major categories of the Consumer Price Index (CPI) basket. Meanwhile, the Monetary Authority of Singapore (MAS) Core Inflation is up 1.4% YoY, an announcement revealed.

The May YoY inflation rate is higher compared to the 0.1% rise YoY in April.

“This reflected a stronger pickup in the prices of private road transport, services and retail items, as well as a smaller year-ago decline in accommodation cost,” the joint announcement by the Ministry of Trade and Industry (MTI) and MAS said.

In May, private road transport cost grew 0.1% which upturned the 0.8% slip in April. According to the announcement, the increase resulted from a faster pace of increase in petrol prices, as well as a smaller year-ago fall in car prices following a rise in Certificate of Entitlement (COE) premiums.

The stronger pickup in holiday expenses and airfares combined with a smaller year-ago decline in telecommunications services fees made services inflation rose 1.6% in May from 1.3% in April. Retail item cost also increase to 1.3% from 0.9% in April.

Meanwhile, there was a slip in flood inflation to 1.3% from 1.4% in April due to moderate price increases in non-cooked food items. Prices for prepared meals resumed its April pace in May.

“Meanwhile, global food commodity prices are projected to rise slightly as demand strengthens amid ample supply conditions,” the agencies said.

Accommodation cost closed to a 3.2% fall in May from a 3.6% decline in April due to the cost of housing maintenance & repairs, as well as a slower pace of decline in housing rentals.

“Domestic sources of inflation are expected to increase alongside a faster pace of wage growth and a pickup in domestic demand,” the joint statement noted. “However, the extent of consumer price increases will remain moderate, as retail rents have stayed relatively subdued and firms’ pricing power may be constrained by market competition.”

Meanwhile, the two agencies think that imported inflation will likely to pick up mildly as the rise in global oil prices since the start of 2018 are expected to average higher for the full year as compared to 2017.