Key Singapore inflation measure rises to 2.8% in September

Singapore’s key inflation measure edged up in September amid a spike in the prices of goods.  

“Unit labour costs are projected to rise more gradually alongside moderating nominal wage growth and improving productivity. The pass-through of earlier increases in labour costs to consumer prices has largely peaked and is expected to continue at a reduced pace,” the Monetary Authority of Singapore said on Wednesday.  

The Monetary Authority of Singapore’s core inflation figure, which excludes accommodation and private transport, came in at 2.8% year-on-year in September, up from 2.7% in August. A rise in costs in the Retail & Other Goods segment drove the increase in inflation.  

Core CPI increased by 0.1% on a month-on-month basis.  

Meanwhile, headline inflation cooled to 2.0% year-on-year in September from 2.2% in August. This was mainly driven by a stronger reduction of prices within the Private Transport sector. The fall was enough to offset the rise in Retail & Other Goods.  

“Although global energy prices have been volatile in recent weeks, they have on average remained below the levels a year ago,” MAS said.  

On a month-on-month basis, headline inflation rose by 0.3%.  

Deep dive 

Pricing within the Retail & Other Goods segment accelerated at a fast pace in September, up 0.8% year-on-year, compared to August’s 0.4% rise. This was due to due to a smaller decline in clothing & footwear prices. 

Services inflation was flat at 3.3% annually for both September and August.  

“Services inflation was unchanged as a fall in telecommunications services fees was broadly offset by a larger increase in tuition & other fees, holiday expenses and health insurance costs,” MAS said. 

Private Transport costs cooled 2.4% year-on-year in September. This showed a steep dive from August’s 1.0% decline.  

“Private transport costs fell more sharply due  to a larger decline in car prices alongside lower petrol prices,” MAS said.  

Accommodation inflation eased to 2.7% year-on-year in September thanks to a smaller increase in housing rents. August’s print came in at 2.9%.  

Food inflation edged lower to 2.6% annually in September as food services prices rose at a slower pace. August saw 2.7% year-on-year inflation in the Food segment. 

Electricity & Gas price increases moderated to 6.3% year-on-year in September compared to 6.6% in AUgust. This was thanks to electricity prices rising at a slower pace.  

Outlook 

Core inflation is expected to stay on a gradual moderating trend and reach around 2% by the end of this year, according to MAS. Core inflation is expected to average between 2.5% and 3.0% in 2024. This is then expected to moderate further to between 1.5–2.5% in 2025. 

Meanwhile, headline inflation is seen coming in at around 2.5% for 2024 as a whole, and then averaging between 1.5% and 2.5% in 2025.  
“Risks to the inflation outlook are relatively balanced. Domestically, stronger-than-expected labor market conditions could lead to a slower easing in unit labor cost growth,” MAS said.  

“An intensification of geopolitical tensions may lead to higher commodity prices and add to imported costs. Conversely, a significant downturn in the global economy could induce a greater easing of cost and price pressures, causing domestic inflation to come in materially lower than expected.”