View of the skyline in Singapore Jan 27, 2023. REUTERS/Caroline Chia/File photo
SINGAPORE — Singapore’s core inflation rose 3.6 percent in February from a year earlier, official data showed on Monday, above estimates and the highest since July 2023 amid a rise in the cost of healthcare and recreation goods and services.
The core inflation rate, which excludes private road transport and accommodation costs, was faster than the 3.4 percent forecast by a Reuters poll of economists and the 3.1 percent seen in January.
The February figure was the highest since the 3.8 percent in July 2023 according to LSEG data.
Headline consumer prices in February were up 3.4 percent from the same month last year, stronger than the 3.3 percent forecast in the poll and the 2.9 percent rise in January.
“This was driven by higher services and food inflation, partly reflecting seasonal effects associated with the Chinese New Year,” the Trade Ministry and Monetary Authority of Singapore (MAS) said in a statement on Monday.
READ: Singapore seen holding monetary policy in delicate balancing act
Core inflation is expected to resume a gradual moderating trend over the rest of the year, it said, as import cost pressures continue to decline and tightness in the domestic labour market eases.
Sticky inflation
They projected both headline and core inflation to average 2.5 percent to 3.5 percent for 2024.
While inflation has slowed from its peak of 5.5 percent in January last year, it remains sticky amid slowing economic growth and an increase in goods and service tax by one-percentage point this year.
The economy expanded 1.1 percent last year, moderating from the 3.8 percent in 2022.
READ: Singapore’s Q4 GDP growth speeds up
Singapore expects higher economic growth at 1 percent to 3 percent this year but warned of a mixed economic outlook due to geopolitical risks. MAS in January left monetary policy settings unchanged in its first review of 2024.
MAS, which uses exchange rate as its primary tool, has increased the frequency of its reviews from twice a year to quarterly starting this year. It is due to revisit monetary settings in April.
“The gradually strengthening S$ trade-weighted exchange rate should also continue to temper Singapore’s imported inflation in the quarters ahead,” MAS and the Trade Ministry said.