Core inflation was unchanged in April as travel services post higher inflation

The central bank said there was lower inflation for electricity and gas.

The Monetary Authority of Singapore (MAS) declared that core inflation was at 5% year-on-year (YoY) in April, which remained unchanged from March.

CPI for all items grew to 5.7% YoY in April from 5.5% in March. This was due to higher inflation for services and private transport.

On a monthly basis, core CPI was up by 0.4% in April following the increase in costs of holiday expenses and airfares.

MAS noted that there was “lower inflation for electricity & gas, food, and retail & other goods but were offset by higher inflation for travel-related services.”

Per segment

Private transport inflation swelled 10.4% in April compared to 8.6% in March whilst accommodation inflation inched up 4.9% in April from 4.8 in March.

For retail and other goods as well as food, inflation eased to 2.9% and 7.1% in April, respectively.

Electricity inflation declined 2.7% in April from 12.2% in March.

“Electricity & gas inflation declined due to smaller increases in both electricity costs and the gas tariff,” read the MAS statement.

Looking ahead

Global supply frictions eased and consumer goods inflation was subdued even as the overall core inflation remains high.

On the domestic side, MAS said unit labour costs are expected to rise further in the near term.

“Businesses are expected to continue to pass through accumulated labour costs to consumer prices, albeit at a more moderate pace amid the slowdown in domestic economic activity,” MAS said.

In the next few months, MAS said core inflation in the market will still be elevated but on a moderating path. If this continues, it may slow down discernibly in H2 2023.

“Meanwhile, with the increase in COE quota and ramp-up in the supply of housing units available for rental, private transport, and accommodation inflation is expected to moderate over the year,” it added.

MAS’ full-year outlook is that headline and core inflation are projected to average 5.5–6.5% and 3.5–4.5%, respectively, for 2023 as a whole.

But “excluding the transitory effects of the 1%-point increase in the GST to 8%, headline, and core inflation are expected to come in at 4.5–5.5% and 2.5–3.5%, respectively.”