Inflation inched up to 1.9% in December

The faster MoM growth came as the prices of services and retail items picked up pace.

Singapore’s core inflation excluding the costs of accommodations and private road transport rose to 1.9% on a YoY basis in December 2018 from 1.7% in November, according to data from the Singapore Department of Statistics (SingStat).

The rise was on the back of larger increases in services and retail costs, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) explained in a statement.

Meanwhile, consumer price index (CPI-All Items) inflation picked up to 0.5% YoY in December 2018 from 0.3% which reflected higher inflation for services and retail items, as well as a smaller decline in accommodation costs.

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According to the data, services inflation increased to 1.5% YoY in December from 1.2% in November due to a stronger pick up in holiday expenses and airfare, amidst a smaller decline in telecommunication services fees.

The overall cost of retail items jumped 1.7% YoY in December compared to the 1.1% increase seen in November. This was attributed to larger increases in the prices of clothing and footwear, and household durables, according to MAS and MTI.

Meanwhile, food inflation remained unchanged at 1.4% YoY in December from the preceding two months, on the back of price increases for both non-cooked food items and prepared meals remaining broadly the same. On an MoM basis however, overall food prices inched up 0.1% due to an increase in the prices of restaurant and hawker meals.

“Prices of non-cooked food items were broadly unchanged from November as an increase in the prices of fish and seafood was offset by a decline in vegetable prices,” the agencies explained.

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Prices of electricity and gas jumped 14.6% YoY in December, although this remained lower than the 15.4% increase reported in November, the agencies pointed out. The lower rate of inflation was attributed to the effect of the nationwide launch of the Open Electricity Market (OEM) on electricity prices.

On the other hand, private road transport costs dipped 3.7% YoY in December which was slightly faster than the 3.6% decline in November. Although the fall in car prices moderated in December, its effect was offset by a slower pace of increase in petrol prices, the statement highlighted.

Accommodation costs slipped 1.9% YoY in December, moderating from the 2.1% decline reported in November due to a gradual fall in housing rentals, the agencies explained.

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For the whole of 2018, headline inflation came in at 0.4%, lower than the 0.6% recorded in 2017, whilst core inflation rose to 1.7% from 1.5% in 2017.

According to MAS and MTI, there could be a greater pass-through of higher import and labour costs to consumer prices as domestic demand strengthens in 2019. However, the agencies further indicated that the extent of overall price increases would be capped by greater market competition in several consumer segments such as telecommunications, electricity and retail. 

"Core inflation averaged 1.7% in 2018 and is expected to come in within the forecast range of 1.5-2.5% in 2019," the agencies highlighted, with headline inflation projected to pick up between 1-2% in 2019 as the the overall drag from accommodation and private road transport costs lessen.