A slight dip in inflation offers relief, but future price pressures remain uncertain.
SINGAPORE: Inflation showed signs of easing in January, with the year-on-year (YoY) rate dropping to 2.9%, a decline from December’s 3.7%, according to data from the Department of Statistics (SingStat). This marks a welcome slowdown in the pace of price increases, bringing a bit of relief to consumers.
The Consumer Price Index (CPI) for all items registered a modest 0.7% month-on-month (MoM) decline in December 2023, reflecting a slight easing in the inflationary trend. Core inflation also softened, dipping from 3.3% YoY in December 2023 to 3.1% YoY in January.
Significant reductions were seen in accommodation and private transport inflation, which fell from 4.1% YoY to 2.1% YoY, and from 5.0% YoY to 2.9% YoY, respectively. Services and food also saw price increases slow down, with inflation for these sectors decreasing from 3.9% YoY to 3.3% YoY, and from 3.7% YoY to 3.3% YoY, respectively.
However, not all sectors experienced a slowdown. Retail goods and electricity and gas saw an uptick in price hikes, with retail inflation rising to 1.4% YoY (up from 1.1% YoY) and electricity and gas prices climbing to 5.3% YoY (up from 1.3% YoY).
The Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) anticipate that core inflation may rise again in February due to the Chinese New Year period. However, they expect the overall trend to remain moderating throughout the year, driven by easing import cost pressures and reduced tightness in the domestic labor market.
Looking ahead, MTI and MAS predict that headline and core inflation will range between 2.5% and 3.5%. Excluding the temporary impact of the 1%-point GST hike to 9%, inflation is expected to remain subdued, with forecasts ranging from 1.5% to 2.5%.
While the recent easing in inflation brings some relief, it’s clear that inflationary pressures could still present challenges throughout the year.
