SINGAPORE — Consumer prices in Singapore are set to rise further as businesses pass on accumulating costs to customers amid firm demand conditions and sharply higher commodity prices, the central bank said.
The core consumer price index — which excludes private transport and accommodation costs — is projected to pick up in the coming months and peak in the third quarter, the Monetary Authority of Singapore (MAS) said in its half-yearly macroeconomic review on Thursday (28 April).
One major factor is the recent surge in energy prices, which will filter through to electricity and gas tariffs in the third quarter, according to the report.
Sharply higher global commodity prices and renewed supply disruptions as a result of both the Russia-Ukraine crisis and the regional pandemic situation are adding to pre-existing global inflationary pressures.
Against this backdrop, consumer price inflation in Singapore is expected to increase and remain elevated for some time.
Notably, the surge in global energy and agricultural commodity prices will raise domestic inflation for fuel, electricity and gas and non-cooked food, which will in turn feed into higher inflation for transport and food services over time.
Underlying price pressures could ease towards the end of this year, on the assumption that global commodity prices stabilise and global supply constraints loosen to some extent, the central bank said.
Higher food costs
However, the higher level of global food prices will eventually be fully reflected in domestic food prices. Elevated global food prices are therefore expected to continue to exert pressure on Singapore’s food inflation beyond 2022.
Singapore's core inflation rose to a 10-year high of 2.9 per cent year-on-year in March, up from 2.2 per cent in February, driven by higher inflation for food and services, official data released on Monday showed.
For the whole of 2022, MAS core inflation is forecasted to come in at 2.5 per cent to 3.5 per cent, up from the previous forecast range of two to three per cent.
The headline, or overall inflation, which includes private transport and accommodation, is forecast at 4.5 per cent and 5.5 per cent for the year, up from an earlier range of 2.5 per cent to 3.5 per cent.
This is due to a backlog of construction delays in residential projects pushing up home prices and elevated Certificate of Entitlement premiums and petrol prices.
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