Singapore core inflation eases to 1.8% in September, missing forecast

Singapore’s core inflation edged down to 1.8 per cent in September from a year earlier, compared with 1.9 per cent the previous month, data showed.

The median forecast in a Reuters poll was for core inflation to be 1.9 per cent, unchanged from August.

The decline came from slower growth in retail prices, which offset higher price increases in services, the Monetary Authority of Singapore and Ministry of Trade and Industry said in a joint statement on Tuesday (23 October).

The overall cost of retail items rose by 1.5 per cent in September, moderating from the 2 per cent increase in August, as price increase in clothing and footwear slowed. Also, there was a steeper fall in the prices of recreation, entertainment goods and telecommunication equipment, the statement said.

The core inflation measure excludes changes in the price of cars and accommodation, which tend to be influenced by government policies and are volatile.

The MAS on 12 October tightened monetary policy for the second time this year and said inflation is expected to rise in the near term.

The all-items or headline inflation rose by 0.7 per cent year-on-on year, the same growth as the previous month’s rate. The median forecast in a Reuters poll was for 0.8 per cent.

Inflation outlook

Core inflation is expected to rise gradually over the course of 2018 to average within a range of 1.5-2 per cent for the full year, the monetary authority said. Similarly, headline inflation is projected to be 0.5 per cent for the full year.

“In the quarters ahead, imported inflation is likely to increase on account of higher global oil and food prices,” the MAS said.