Inflation returns to positive territory in January

Prices pick up for the first time since the COVID-19 pandemic. 

Headline inflation steps up to 0.2% in January, according to latest government data.

This is the first uptick in prices since the 0.3% recorded in February last year, before the COVID-19 crisis.

Prices were bouyed by a rise in private transportation and accomodation costs, anchored by a decline in service costs.

Private transportation costs sped up to 1.9% from 1.2% due to an increase in car prices. Higher rent led to to the pick up of accomodation inflation to 0.5% from the 0.3% recorded in the previous month.

Costs of retail and other goods as well as food inflation likewise saw a dip in January to -1.3% from -1.2%, and to 1.5% from 1.6%, respectively.

Inflation slowed down when it came to services costs to -0.3% from 0.8% due to higher tuition fees and point-to-point trnasportation service costs.

The reduction in electricity tariffs took effect in the first quarter of 2021, leading to a slowdown in electricity and gas prices by -9.7%, dipping from the -6.7% recorded in the previous month.

“Core inflation is forecast to turn mildly positive this year, as the projected rise in oil prices from a year ago leads to a pickup in electricity and gas tariffs, and the disinflationary effects of government subsidies introduced in 2020 fade. Some components of domestic services inflation could also gradually increase, in tandem with the economic recovery,” said the Monetary Authority of Singapore and the Ministry of Trade and Industry in a joint statement on 24 February.

The government expects headline inflation to stay within the -0.5% and 0.5% mark in 2021.