ECONOMY | Staff Reporter, Singapore

Singapore's core inflation picked up 1.9% in October

It was driven by the 16.6% YoY increase in electricity and gas costs.

Singapore’s core inflation rose 1.9% YoY in October from 1.8% in the preceding month on the back of higher electricity and gas costs that more than offset lower food and retail inflation, according to a joint report by the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS).

The core inflation measure excludes the costs of accommodation and cars.

Despite this, CPI-All Items, or headline, inflation remained unchanged at 0.7% YoY from the previous month due to a steeper decline in private road costs.

Private road transport costs dipped 0.6% which is steeper than the 0.1% decline in September due to the larger fall in car prices that outweighed the faster pace of increases in petrol prices.

Also read: COE prices for cars lower in latest bidding exercise

Electricity and gas costs jumped 16.6% YoY in October compared to the 13% rise in September fueled by the upward revision in electricity tariffs. This came as a result of market volatility and higher oil prices in the preceding months.

Meanwhile, food inflation eased to 1.4% YoY from 1.6% in September, reflecting smaller price increases for both non-cooked items and prepared meals, the agencies said in a statement.

The overall cost of retail items rose 1.3% YoY, easing from the 1.5% growth seen in September.

“This mostly reflected lower inflation for clothing & footwear items, personal effects and medical products, which outweighed a smaller drop in the prices of telecommunication equipment as well as an increase in the prices of household durables after several months of decline,” the agencies noted.

Services inflation on the other hand came in at 1.4% YoY remaining unchanged from September. “This was because a larger pickup in education services fees and holiday expenses, as well as a smaller decline in telecommunication services fees, were offset by a slower pace of increase in recreational and domestic services fees and airfare,” MAS and MTI explained.

Accommodation costs on the other hand fell 2.5%, which is the same rate of decline in September, as a smaller increase in housing maintenance and repairs costs offset the more gradual fall in housing rentals.

According to the agencies, core inflation is expected to rise modestly in the coming months and fall between 1.5-2% in 2018 and 1.5-2.5% in 2019. “CPI-All Items inflation is projected to be about 0.5% in 2018, before picking up to 1-2%in 2019,” they added.

Inflation for the non-core components of the CPI is expected to increase in 2019, with private road transport costs projected to grow on the back of higher COE premiums. Imputed rentals on owner-occupied accommodation on the other hand could fall by a lesser extent as rental demand gradually picks up.

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